<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________
Commission File Number 1-8972
CWM MORTGAGE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-3983415
(State or other jurisdiction of (I. R. S. Employer Identification No.)
incorporation or organization)
35 NORTH LAKE AVENUE, PASADENA, CALIFORNIA 91101-1857
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (800) 669-2300
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this report.
Common stock outstanding as of March 31, 1996: 43,980,354 shares
1
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CWM MORTGAGE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
ASSETS
Mortgage assets
Mortgage loans held for investment, net $1,172,439 $1,424,583
Mortgage loans held for sale - prime 388,164 379,363
Mortgage loans held for sale - subprime 116,254 30,221
Collateral for CMOs 326,942 184,111
Construction loans receivable, net 160,313 129,323
Securitized master servicing fees 116,302 120,281
Revolving warehouse lines of credit, net 205,701 190,705
Cash and cash equivalents 3,435 8,049
Investment in and advances to Indy Mac 139,135 145,537
Other assets 30,978 31,440
---------- ----------
Total assets $2,659,663 $2,643,613
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Repurchase agreements and other credit facilities $1,910,968 $2,037,834
Collateralized mortgage obligations 299,381 164,760
Senior unsecured notes 59,670 59,649
Accounts payable and accrued liabilities 19,556 18,386
---------- ----------
Total liabilities 2,289,575 2,280,629
Commitments and contingencies -
Shareholders' equity
Common stock - authorized, 100,000,000 shares of
$.01 par value; issued and outstanding,
43,980,354 shares at March 31, 1996 and
42,413,842 at December 31, 1995 440 424
Additional paid-in capital 378,194 353,965
Net unrealized gain (loss) on available-for-sale
securities held by Indy Mac (9,659) 7,845
Cumulative earnings 165,508 150,148
Cumulative distributions to shareholders (164,395) (149,398)
---------- ----------
Total shareholders' equity 370,088 362,984
---------- ----------
Total liabilities and shareholders' equity $2,659,663 $2,643,613
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
CWM MORTGAGE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1996 1995
----------- ------------
<S> <C> <C>
REVENUES
Interest income
Mortgage loans held for investment $ 27,081 $ 20,206
Mortgage loans held for sale 13,975 10,635
Collateral for CMOs 5,334 4,681
Construction loans 4,483 462
Securitized master servicing fees, net 2,467 2,915
Revolving warehouse lines of credit 3,819 1,205
Advances to Indy Mac 1,773 1,395
Other 84 31
----------- -----------
Total interest income 59,016 41,530
Interest expense
Repurchase agreements and other credit facilities 33,547 24,111
Collateralized mortgage obligations 5,608 4,876
Senior unsecured notes 1,368
----------- -----------
Total interest expense 40,523 28,987
Net interest income 18,493 12,543
Provision for loan losses 2,403 242
----------- -----------
Net interest income after provision
for loan losses 16,090 12,301
Equity in earnings (losses) of Indy Mac 3,546 (623)
Other, net 208 162
----------- -----------
Net revenues 19,844 11,840
EXPENSES
Salaries, general and administrative 2,415 844
Management fees to affiliate 2,069 767
----------- -----------
Total expenses 4,484 1,611
----------- -----------
NET EARNINGS $ 15,360 $ 10,229
=========== ===========
EARNINGS PER SHARE $0.36 $0.28
=========== ===========
Weighted average shares outstanding 43,105,573 36,979,444
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
CWM MORTGAGE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 15,360 $ 10,229
Adjustments to reconcile net earnings
to net cash used in operating activities:
Amortization and depreciation 5,510 2,597
Provision for loan losses 2,403 242
Equity in earnings of Indy Mac (3,546) 623
Purchases of mortgage loans held for sale (1,095,121) (1,145,320)
Principal repayments and proceeds from sale of mortgage loans 993,839 1,126,201
Change in accrued income and expense 1,389 (1,683)
----------- -----------
Net cash used in operating activities (80,166) (7,111)
CASH FLOWS FROM INVESTING ACTIVITIES:
Collateral for CMOs:
Principal payments on collateral 10,746 7,037
Net change in GICs held by trustees (644) 163
----------- -----------
10,102 7,200
Purchases of mortgage loans held for investment - (138,807)
Principal payments on mortgage loans held for investment 102,146 16,957
Investment in securitized master servicing fees - (19,051)
Net (increase) decrease in revolving warehouse lines of credit (15,145) 5,897
Net increase in construction loans receivable (31,865) (12,857)
Investment in Indy Mac - (3,961)
Advances to Indy Mac, net of cash repayments (7,556) (49,808)
Increase in other assets 1,430 (2,545)
----------- -----------
Net cash provided by (used in) investing activities 59,087 (196,975)
CASH FLOWS FROM FINANCING ACTIVITIES:
Collateralized mortgage obligations:
Proceeds from issuance of securities 146,931 -
Principal payments on securities (10,400) (7,435)
----------- -----------
136,531 (7,435)
Net increase (decrease) in repurchase agreements and other credit facilities (126,865) 155,972
Net proceeds from issuance of common stock 24,245 68,998
Cash dividends paid (14,997) (10,906)
Increase in other liabilities (2,449) (69)
----------- -----------
Net cash provided by financing activities 16,465 206,560
----------- -----------
Net increase (decrease) in cash (4,614) 2,474
Cash at beginning of period 8,049 2,605
----------- -----------
Cash at end of period $ 3,435 $ 5,079
=========== ===========
Supplemental cash flow information:
Cash paid for interest $ 38,338 $ 26,564
=========== ===========
Supplemental disclosure of non-cash activity:
$154.6 million of mortgage loans held for investment were transferred to
collateral for CMO's in association with the issuance of a CMO.
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
CWM MORTGAGE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. The consolidated financial statements include the accounts of CWM
Mortgage Holdings, Inc. and its qualified REIT subsidiaries ("CWM"). The
mortgage loan conduit operations are primarily conducted through Independent
National Mortgage Corporation, Inc. ("Indy Mac"), a taxable corporation. CWM
owns all the preferred stock and a 99% economic interest in Indy Mac. CWM's
investment in Indy Mac is accounted for under a method similar to the equity
method. In addition, Indy Mac is not consolidated for income tax purposes. As
used herein, the "Company" includes CWM and Indy Mac and their respective
subsidiaries.
All significant intercompany balances and transactions have been eliminated in
consolidation of CWM. Certain reclassifications have been made to the financial
statements for the period ended March 31, 1995 to conform to the March 31, 1996
financial statement presentation.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the three months ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1996. For further information, refer to the consolidated financial statements
and footnotes thereto included in CWM's annual report on Form 10-K for the year
ended December 31, 1995.
NOTE B - ALLOWANCE FOR CREDIT LOSSES
- ------------------------------------
During the three months ended March 31, 1996, CWM added $2.4 million to its
allowance for credit losses and recorded charge-offs of $23,000. The allowance
for credit losses totaled $6.7 million at March 31, 1996, and includes reserves
for mortgage loans held for investment, construction loans and warehouse lines
of credit in the amounts of $4.9 million, $996,000 and $797,000, respectively.
5
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NOTE C - INVESTMENT IN INDY MAC
- -------------------------------
Summarized financial information for Indy Mac follows (in thousands).
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
Mortgage loans held for sale, net - prime $ 1,163 $ 72,921
Mortgage loans held for sale - subprime 14,146 19,167
Mortgage securities available-for-sale 413,761 350,752
Securitized master servicing fees 165,215 116,851
Master servicing fees receivable 39,034 36,570
Other assets 20,224 22,953
-------- --------
Total Assets $653,543 $619,214
======== ========
Repurchase agreements and other credit
facilities $489,256 $441,305
Due to CWM 91,148 83,592
Accounts payable and accrued liabilities 24,669 31,746
Shareholders' equity 48,470 62,571
-------- --------
Total liabilities and shareholders'
equity $653,543 $619,214
======== ========
</TABLE>
<TABLE>
<CAPTION>
Quarter ended March 31,
1996 1995
--------- ------------
<S> <C> <C>
Interest income
Mortgage loans held for sale $ 1,478 $ 11,861
Mortgage securities
available-for-sale 7,330 3,404
Securitized master servicing fees,
net 1,893 -
Master servicing fees receivable,
net 746 1,224
-------- --------
Total interest income 11,447 16,489
Interest expense 8,742 12,355
-------- --------
Net interest income 2,705 4,134
Provision for loan losses - -
-------- --------
Net interest income after
provision for loan losses 2,705 4,134
Gain on sale of mortgage loans and
issuance of securities 4,407 (2,690)
Gain on sale of mortgage securities
available-for-sale 4,995 1,877
Other, net 248 -
-------- --------
Net revenues 12,355 3,321
Salaries, general and administrative 5,566 4,398
Management fees to affiliate 443 8
-------- --------
Total expenses 6,009 4,406
-------- --------
Earnings before income tax provision 6,346 (1,085)
Income tax provision (benefit) 2,764 (456)
-------- --------
Net earnings (loss) $ 3,582 $ (629)
======== ========
</TABLE>
6
<PAGE>
Allowance for Credit Losses. The allowance for credit losses related to
mortgage loans held for sale totaled $1.8 million at March 31, 1996. Indy Mac
recorded charge-offs of $18,000 during the three months ended March 31, 1996.
Mortgage Securities Available-For-Sale. Mortgage securities consist of mortgage
derivative products including subordinated securities, principal-only and
interest-only securities and inverse floater securities. These securities
primarily consist of securities retained upon the issuance of Indy Mac's REMIC
securities. Contractual maturities on the mortgage securities range from 10 to
30 years. The following is a disclosure of the estimated fair value of mortgage
securities as of March 31, 1996 and December 31, 1995 (in thousands):
<TABLE>
<CAPTION>
NET ESTIMATED GROSS GROSS
BOOK FAIR UNREALIZED UNREALIZED
CLASSIFICATION VALUE VALUE GAINS LOSSES
- -------------------- -------- --------- ---------- ----------
<S> <C> <C> <C> <C>
March 31, 1996 $430,582 $413,761 $ 7,322 $24,143
==============================================
December 31, 1995 $337,088 $350,752 $17,158 $ 3,494
==============================================
</TABLE>
During the quarter ended March 31, 1996, Indy Mac sold mortgage securities
classified as available-for-sale with a net book value of $40.8 million (based
upon specific identification) for proceeds of $45.8 million, resulting in a
gross realized gain of $5.0 million. There were no gross realized losses
during the three months ended March 31, 1996. For the three month period ended
March 31, 1995, Indy Mac sold mortgage securities classified as available-for-
sale with a net book value of $34.7 million for proceeds of $36.6 million,
resulting in a net gain of $1.9 million. This net gain was comprised of gross
realized gains and gross realized losses of $1.9 million and $25,000,
respectively. The estimated fair value as of March 31, 1996 in the above table
reflects the increase in interest rates during the quarter, combined with lower
expectations of prepayment rates.
As of March 31, 1996, all of Indy Mac's mortgage securities were pledged as
collateral under repurchase agreements.
NOTE D - SUBSEQUENT EVENT
On April 18, 1996, the Board of Directors declared a cash dividend of $0.36 per
share to be paid on June 3, 1996 to shareholders of record on April 29, 1996.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
CWM Mortgage Holdings, Inc. was incorporated in the state of Maryland in July
1985 and reincorporated in the state of Delaware in March 1987. References to
"CWM" mean either the parent company alone or the parent company and the
entities consolidated for financial reporting purposes, while references to the
"Company" mean the parent company, its consolidated subsidiaries and Independent
National Mortgage Corporation and its subsidiary ("Indy Mac"), which is not
consolidated with CWM for financial reporting or tax purposes.
In its mortgage loan conduit business, the Company acts as an intermediary
between the originators of mortgage loans and permanent investors in mortgage-
backed securities ("MBS") secured by or representing an ownership interest in
such mortgage loans. The Company purchases "jumbo" and other "nonconforming"
mortgage loans from mortgage originators. The Company and its sellers negotiate
whether such sellers will retain, or the Company will purchase the rights to
service the mortgage loans delivered by such sellers to the Company. All loans
purchased by CWM, for which a Real Estate Mortgage Investment Conduit ("REMIC")
transaction or whole loan sale is contemplated, are committed for sale to Indy
Mac at the same price at which the loans were acquired by CWM. Pursuant to the
Master Forward Commitment and Servicer Agreement between CWM and Indy Mac, Indy
Mac does not purchase any loans from entities other than CWM.
The Company's conduit operations were expanded during 1995 through the
introduction of two divisions; Independent National Finance Corporation ("INFC")
and Independent National Housing Services (INHS). INFC was formed to purchase,
securitize and sell subprime mortgage loans (i.e., "B through D" paper
mortgages). INHS was formed to facilitate the purchase or origination,
securitization and sale of consumer loans secured by manufactured housing.
The Company's principal sources of income from its conduit operations are gains
recognized on the sale and securitization of loans, the net spread between
interest earned on loans and the interest costs associated with the borrowings
used to finance such loans pending their securitization, the net interest earned
on the Company's mortgage securities, and master servicing fee income.
In addition to its conduit operations, the Company earns fee income and net
interest income through its portfolio of mortgage loans held for investment and
its construction and warehouse lending programs. The construction lending
operation consists of two distinct divisions: (i) the Builder Division, which
provides tract construction loans, builder custom home loans, model home loans
and lot financing on a nationwide basis to small-to-medium-size builders, and
(ii) the Consumer Division, which provides construction-to-permanent financing,
home improvement loans and lot financing to individual borrowers who wish to
construct or remodel their principal or secondary residences. The Company's
warehouse lending operation provides financing to small-to-medium-size mortgage
originators for the origination and sale of mortgage loans, the retention,
acquisition or sale of servicing rights and the carrying of mortgage loans
pending foreclosure and/or repurchase from an investor.
In the first quarter of 1996, Indy Mac purchased Guaranty Asset Protection
Services (GAPS), a mortgage fraud detection company located in West Hills,
California. The acquisition of GAPS will allow the Company to help prevent
fraud on its existing purchase volume as well as offer fraud detection services
to the Company's base of customers.
8
<PAGE>
FINANCIAL CONDITION
CONDUIT OPERATIONS: During the first three months of 1996, CWM purchased $1.1
billion of non-conforming mortgage loans, including $98 million of subprime
mortgage loans through INFC, and $581,000 of manufactured housing loans through
INHS. These loans were financed on an interim basis using equity and short-term
financing in the form of repurchase agreements and other credit facilities. In
general, the Company, through Indy Mac, sells the loans in the form of REMIC
securities or whole loan sales or, alternatively, through CWM invests in the
loans on a long-term basis using financing provided by CMOs or repurchase
agreements and other credit facilities. During the first three months of 1996,
Indy Mac sold $1.0 billion of mortgage loans through the issuance of five series
of multiple-class MBS in the form of REMIC securities. In addition, INFC Sold
$9.9 million of whole loans during the quarter. At March 31, 1996, the Company
was committed to purchase $386.7 million of mortgage loans from various mortgage
originators. The Indy Mac master servicing portfolio at quarter-end had an
aggregate outstanding principal balance of $9.9 billion with a weighted average
coupon of 8.378%.
MORTGAGE LOANS HELD FOR INVESTMENT: The $1.2 billion portfolio of mortgage loans
held for investment at March 31, 1996 consisted of $827.2 million of varying
types of adjustable-rate products which contractually reprice in monthly, semi-
annual or annual periods; $190.6 million of mortgage loans which have a fixed
rate for a period of three to ten years, and subsequently convert to adjustable-
rate mortgage loans that reprice annually and $159.6 million of fixed-rate
mortgage loans. The weighted average coupon of the mortgage loans held for
investment at March 31, 1996 was 8.93%. The Company finances mortgage loans held
for investment with repurchase agreements and other credit facilities which have
maturities ranging from overnight to 14 months as of March 31, 1996. The company
also utilizes interest rate swap agreements to manage the interest rate exposure
on its portfolio of mortgage loans held for investment. The allowance for losses
related to mortgage loans held for investment totaled $4.9 million at quarter
end. Charge-offs related to mortgage loans held for investment totaled $23,000
for the three months ended March 31, 1996.
During the first quarter of 1996, the Company financed $154.6 million of
mortgage loans held for investment through the issuance of a CMO. The mortgage
loans consisted of loans that are fixed for a period of 10 years and
subsequently convert to adjustable-rate mortgage loans. The issuance of the CMO
substantially defeased the interest rate risk component of holding these loans
for investment.
CONSTRUCTION LENDING OPERATIONS: At March 31, 1996, the Builder Division had
loans outstanding totaling $114.4 million, net of reserves, with $198.5 million
of remaining commitments to fund tract and custom home loans. The Consumer
Division had loans outstanding at March 31, 1996 totaling $45.9 million with
remaining commitments to fund construction-to-permanent and home improvement
loans of $29.8 million. The allowance for losses related to construction loans
totaled $996,000 at march 31, 1996. There were no charge-offs of construction
loans during the three months ended March 31, 1996. The Company had outstanding
borrowings under a revolving credit facility totaling $65.1 million at March 31,
1996 associated with the financing of construction loans.
WAREHOUSE LENDING OPERATIONS: At March 31, 1996, CWM had extended committed
warehouse and related lines of credit in an aggregate amount of $412.9 million,
of which $205.7 million was outstanding, net of reserves. The allowance for loan
losses related to warehouse lines of credit totaled $797,000 at March 31, 1996.
there were no charge-offs of warehouse lines of credit during the threee months
ended March 31, 1996. Repurchase agreements associated with CWM's financing of
these lines of credit totaled $157.4 million at Aarch 31, 1996.
9
<PAGE>
CMO PORTFOLIO: As of March 31, 1996, the CMO portfolio was comprised of 12
series of CMOs. Collateral for CMOs increased from $184.1 million at December
31, 1995 to $326.9 million at March 31, 1996. This increase of $142.8 million
included an increase of $154.6 million of collateral related to the issuance of
a CMO, repayments (including prepayments and premium and discount amortization)
of $10.9 million, and an increase in guaranteed investment contracts ("GICS")
held by trustees and accrued interest receivable of $644,000 and $767,000,
respectively. The fair value of the collateral for CMOs totaled $322.5 million
and $185.2 million at March 31, 1996 and December 31, 1995, respectively. CWM's
CMOs outstanding increased to $299.4 million at March 31, 1996 from $164.8
million at December 31, 1995. This increase of $134.6 million resulted from
issuance proceeds of $146.9 million, principal payments and discount
amortization on CMOs of $10.0 million and an increase in accrued interest
payable on CMOs of $751,000.
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED MARCH 31, 1995
NET EARNINGS: CWM's net earnings were $15.4 million or $0.36 per share, based on
43,105,573 weighted average shares outstanding for the quarter ended March 31,
1996, compared to $10.2 million or $0.28 per share, based on 36,979,444 weighted
average shares outstanding for the quarter ended March 31, 1995.
The increase of $5.2 million in first quarter earnings resulted from an increase
in net interest income of $6.0 million, an increase of $4.2 million in equity in
earnings from Indy Mac, offset by and increases of $2.2 million in the provision
for loan losses, and increases of $1.6 million and $1.3 million in general and
administrative expenses and management fees, respectively.
INTEREST INCOME: Total interest income was $59.0 million for the quarter ended
March 31, 1996 and $41.5 million for the quarter ended March 31, 1995. This
increase in interest income of $17.5 million is primarily due to an increase in
interest on mortgage loans held for investment of $6.9 million with additional
increases in construction loans, mortgage loans held for sale, warehouse lines
of credit, and collateral for CMO's of $4.0 million, $3.3 million, $2.6 million
and $653,000, respectively, offset by a decrease of $448,000 in securitized
master servicing fees.
Interest income on mortgage loans held for investment, consisting primarily of
adjustable rate mortgages, totaled $27.1 million and $20.2 million, resulting in
an effective yield of 8.48% and 8.27%, for the quarters ended March 31, 1996 and
1995, respectively. The increase is primarily due to an increase in the average
outstanding balance of mortgage loans held for investment to $1.3 billion for
the quarter ended March 31, 1996 from $991.1 million for the quarter ended March
31, 1995.
Interest income earned on mortgage loans held for sale totaled $14.0 million and
$10.6 million, resulting in an effective yield of 8.68% and 9.47%, for the
quarters ended March 31, 1996 and 1995, respectively. Average outstanding
balances rose to $647.4 million for the quarter ended March 31, 1996 from $455.3
million for the quarter ended March 31, 1995.
Interest income earned on revolving warehouse lines of credit totaled $3.8
million and $1.2 million with interest earned at an effective yield of 8.71% and
9.97% for the quarters ended March 31, 1996 and 1995, respectively. Interest
income on construction loans totaled $4.5 million and $462,000, with interest
earned at an effective yield of 12.58% and 13.63%, for the quarters ended March
31, 1996 and 1995, respectively.
Interest income on collateral for CMOs was $5.3 million and $4.7 million for the
quarters ended March 31, 1996 and 1995, respectively. The increase was primarily
attributable to an increase in the average aggregate principal amount of
collateral for CMOs outstanding to $288.1 million for the quarter ended March
31, 1996 compared to $227.8 million for the quarter ended March 31, 1995,
offset by a decrease in the effective yield earned on the collateral for CMOs to
7.45% in the first quarter of 1996 from 8.33%
10
<PAGE>
in the first quarter of 1995. Interest income on collateral for CMOs includes
the impact of amortization of premiums paid in connection with acquiring the
loan portfolio and the impact of the delay in the receipt of prepayments and
temporary investment in lower yielding short-term holdings (GICs) until such
amounts are used to make payments on CMOs.
SECURITIZED MASTER SERVICING FEES, NET: Investments in securitized master
servicing fees have characteristics comparable to "excess servicing" insofar as
the value thereof tends to decline as market interest rates decline and
prepayment rates increase. Accordingly, the yield on this investment could
decline considerably as a result of rapid prepayments occasioned by declining
interest rates. It is also possible that under certain high prepayment scenarios
the Company would not recoup its initial investment in such assets. In such a
scenario, the Company would write down its securitized master servicing fees
asset so that the remaining asset does not exceed the present value of future
net master servicing income. Gross master servicing income for CWM was $6.4
million and $6.5 million for the three months ended March 31, 1996 and 1995,
respectively. This gross income was offset by amortization of the securitized
master servicing fees of $4.0 million, and $3.6 million, for the three months
ended March 31, 1996 and 1995, respectively. As of March 31, 1996, securitized
master servicing fees of $116.3 million were pledged to secure borrowings
totaling $66.3 million.
INTEREST EXPENSE: For the quarters ended March 31, 1996 and 1995, total interest
expense was $40.5 million and $29.0 million, respectively. This increase in
interest expense of $11.5 million was due to an increases in interest expense on
repurchase agreements and other credit facilities, senior unsecured notes and
CMO's of $9.4 million, $1.4 million and $732,000, respectively.
Interest expense on repurchase agreements and other credit facilities used to
finance mortgage loans held for sale and investment, revolving warehouse lines
of credit, construction loans and master servicing fees receivable totaled $33.5
million for the quarter ended March 31, 1996, compared to $24.1 million for the
quarter ended March 31, 1995. This increase was principally the result of an
increase in the aggregate average balance of indebtedness outstanding for the
period to $2.1 billion for the quarter ended March 31, 1996 compared to $1.5
billion for the quarter ended March 31, 1995, slightly offset by a decrease in
the weighted average effective rate applicable to such indebtedness to 6.37% for
the quarter ended March 31, 1996 from 6.70% for the quarter ended March 31,
1995.
Interest expense on senior unsecured notes totaled $1.4 million resulting in an
effective rate of 9.22% for the first quarter of 1996. There were no senior
unsecured notes outstanding during the first quarter of 1995.
Interest expense on CMOs was $5.6 million and $4.9 million for the quarters
ended March 31, 1996 and 1995, respectively. This increase was primarily
attributable to an increase in average aggregate CMOs outstanding to $263.6
million for the quarter ended March 31, 1996 from $198.5 million for the quarter
ended March 31, 1995, partially offset by a decrease in the effective rate on
the CMOs to 8.56% in the first quarter of 1996 from 9.96% in the first quarter
of 1995. The overall increase in the outstanding average balance and the
reduction in weighted average effective rate was primarily due to the issuance
of a $146.2 million CMO at an effective rate of 6.75%.
EQUITY IN EARNINGS OF INDY MAC: The 1996 first quarter earnings of $3.6 million
for Indy Mac, in which CWM has a 99% economic interest, resulted principally
from net interest income of $2.7 million, gain on sale of mortgage loans and
issuances of securities of $4.4 million and loss on sale of mortgage securities
offset by expenses of $5.0 million, management fee expense of $443,000, and
income taxes of $2.8 million.
Net income related to the securitized master servicing fees totaled $1.9 million
during the first three months of 1996, including gross income of $9.4 million
offset by amortization of the related asset balances of $7.5 million. Net income
related to the master servicing fees receivable totaled $746,000 during the
first three months of 1996, including gross income of $4.5 million offset by
amortization of the related asset balances of $3.8 million.
During the first quarter of 1995, Indy Mac realized a loss of $629,000 which
resulted principally from net interest income of $4.1 million, including master
servicing fees receivable gross income totaling $6.5 million and related
amortization of $5.3 million, loss on sale of mortgage loans and issuance of
securities of $2.7 million, gain on sale of mortgage securities available-for-
sale of $1.9 million, expenses of $4.4 million, management fee expense of $8,000
and income taxes of $456,000.
11
<PAGE>
SALARIES, GENERAL AND ADMINISTRATIVE EXPENSE: The increase of $1.6 million for
the three months ended March 31, 1996 compared to three months ended March 31,
1995 is primarily the result of growth in personnel related to the operations of
CWM, combined with the expansion of the Company's construction lending
operations.
MANAGEMENT FEES: For the three months ended March 31, 1996, management fees
were $2.1 million compared to $767,000 for the three months ended March 31,
1995. The increase in the management fee of $1.3 million was primarily due to
an increase in incentive compensation for the first quarter of 1996, directly
related to the increase in cwm's earnings in comparison to the first quarter of
1995. Regular management fees also increased due to increased average balances
of CMW's mortgage loans held for investment and warehouse lines of credit.
LIQUIDITY AND CAPITAL RESOURCES
The Company uses proceeds from the issuance of CMOs, repurchase agreements, bank
debt, other borrowings and common stock to meet its working capital needs. In
addition, in connection with its mortgage conduit operations, Indy Mac issues
REMIC securities to help meet such needs.
During the quarter the Company raised $23.5 million of new capital primarily
through the optional cash investment feature of the Dividend Reinvestment Plan.
In addition, the Company completed a $500 million repurchase facility with a
leading investment bank, committed through November 1996.
During the first quarter of 1996 the Company amended its syndicated bank credit
facility to expand the committed amount from $300 million at December 31, 1995,
increasing the total credit line to $400 million with ten commercial banks.
The REIT provisions of the Internal Revenue Code restrict CWM's ability to
retain earnings and thereby replenish the capital committed to its mortgage
portfolio by requiring CWM to distribute to its shareholders substantially all
of its taxable income from operations.
Management believes that the Company's cash flow from operations and the
Company's current and potential financing arrangements are sufficient to meet
current liquidity requirements. The Company's ability to meet future liquidity
requirements is subject to the renewal of credit facilities and/or obtaining
other sources of financing, including raising additional debt or equity from
time to time.
EFFECT OF INTEREST RATE CHANGES
The Company's earnings may be affected by changes in interest rates in a variety
of ways. For example, higher interest rates may depress the market value to an
extent of the Company's investment portfolio if the yield on such holdings does
not keep pace with increases in interest rates. As a result of decreased market
values it could be necessary for the Company to borrow additional funds and
pledge additional assets to maintain financing for its holdings that have not
been financed to maturity through the issuance of CMOs or other debt securities.
Increases in short-term borrowing rates relative to rates earned on holdings
that have not been financed to maturity through the issuance of CMOs or other
debt securities may also adversely affect the Company's earnings. However, the
Company has implemented a hedging strategy which may to an extent mitigate this
adverse effect. In addition, high levels of interest rates tend to decrease the
rate at which mortgages prepay. A decrease in the rate of prepayments may
lengthen the estimated average lives of the underlying mortgages supporting
securitized master servicing fees and master servicing fees receivable and for
classes of the CMOs issued by the Company and may result in higher residual cash
flows from such assets than would otherwise have been obtained. However, higher
rates of interest may also discourage potential mortgagors from borrowing or
refinancing mortgage loans, thus decreasing the volume of loans available to be
purchased through the Company's mortgage conduit operations or financed through
the Company's construction and warehouse lending operations.
12
<PAGE>
Conversely, lower interest rates tend to increase the rate at which mortgages
prepay, which may have an adverse effect on the value of the Company's
securitized master servicing fees and master servicing fees receivable.
However, lower interest rates also tend to improve the Company's mortgage
origination and production volumes and increase the market value, to an extent,
of the Company's mortgage loan and mortgage securities available for sale
portfolio.
13
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
<TABLE>
<CAPTION>
Exhibits
--------
<C> <S>
10.1 Compensation Plan for Michael W. Perry effective
January 1, 1996.
10.2 Compensation Plan for Richard Wohl effective January 1, 1996.
10.3 Compensation Plan for Carmella Grahn effective January 1, 1996.
10.4 Second Amendment to Facility I Credit Agreement dated January
4, 1996 by and among CWM Mortgage Holdings, Inc., Independent
National Mortgage Corporation, Independent Lending Corporation,
First Union National Bank of North Carolina and the Lenders
from time to time party thereto.
10.5 Second Amendment to Facility II Credit Agreement dated January
4, 1996 by and among CWM Mortgage Holdings, Inc., Independent
National Mortgage Corporation, Independent Lending Corporation,
First Union National Bank of North Carolina and the Lenders
from time to time party thereto.
10.6 *Third Amendment to Facility I Credit Agreement dated March 15,
1996 by and among CWM Mortgage Holdings, Inc., Independent
National Mortgage Corporation, Independent Lending Corporation,
First Union National Bank of North Carolina and the Lenders
from time to time party thereto.
10.7 *Third Amendment to Facility II Credit Agreement dated March
15, 1996 by and among CWM Mortgage Holdings, Inc., Independent
National Mortgage Corporation, Independent Lending Corporation,
First Union National Bank of North Carolina and the
Lenders from time to time party thereto.
10.8 Master Forward Commitment and Services Agreement effective
January 1, 1996 between CWM Mortgage Holdings, Inc. and
Independent
National Mortgage Corporation.
10.9 Independent National Mortgage Corporation Capitalization
Agreement effective as of January 1, 1996, by and among CWM
Mortgage Holdings, Inc., Countrywide Funding Corporation and
Independent National Mortgage Corporation.
10.10 Revolving Working Capital Credit Facility and Credit Support
Agreement effective as of January 1, 1996, between CWM Mortgage
Holdings, Inc. and Independent National Mortgage Corporation.
27 Financial Data Schedule
</TABLE>
*Certain confidential portions of this Exhibit have been deleted and have been
filed separately with the Securities and Exchange Commission in connection
with a request for confidential treatment filed pursuant to Rule 24b-2 under
the Securities Exchange Act of 1934, as amended.
Reports on Form 8-K.
--------------------
None
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Pasadena, State of California, on May 15, 1996.
CWM MORTGAGE HOLDINGS, INC.
By: /Michael W. Perry
-----------------
Michael W. Perry
Executive Vice President and Chief
Operating Officer
By: /Carmella L. Grahn
--------------------
Carmella L. Grahn
Senior Vice President and Chief
Accounting Officer
15
<PAGE>
EXHIBIT 10.1
Compensation Plan for Michael Perry
-----------------------------------
NOW, THEREFORE, BE IT RESOLVED, That the Compensation Committee hereby
approves the following plan for Michael Perry with respect to his potential
compensation for 1996:
Base Salary: $400,000
Bonus:
<TABLE>
<CAPTION>
Earnings Per Share Bonus Amount
------------------ ------------
<S> <C>
Below $0.80 -
$0.80 $100,000
$0.90 $200,000
$1.00 $275,000
$1.10 $350,000
$1.20 $425,000
$1.30 $525,000
$1.40 $600,000
$1.50 $675,000
$1.60 $750,000
</TABLE>
<PAGE>
EXHIBIT 10.2
COMPENSATION PLAN
-----------------
Name: RICHARD H. WOHL
Effective Date: January 1, 1996
Effective Period: Calendar Year 1996
. Title: Senior Vice President, General Counsel and Secretary
Description of Key Individual and Department/Business Unit Goals: See
Schedule A.
----------
. Base Salary: $200,000 per annum.
. Production/Profitability Bonus:
*Maximum Amount: $60,000 Minimum Amount: $0
*Criteria: See Schedule B.
----------
. Discretionary Bonus:
*Maximum Amount: $125,000 Minimum Amount: $0
*Criteria: See Schedule C.
----------
. Regular Benefits: Standard Countrywide Asset Management Corp. ("CAMC")
dental, medical and insurance plans. Eligible for participation in CAMC
401(k) plan on the first day of the calendar quarter following completion
of one year of service.
. Additional Benefits: Standard Countrywide senior executive benefits
(deferred compensation plan, etc.)
. Vacation: Three (3) weeks per year.
<PAGE>
This Compensation Plan is intended to outline the general terms of the base
salary, bonus and benefits that will apply to your position during the period
specified above. This Compensation Plan should not be construed as a contract
of employment and may be amended or revised at any time by the Chief Operating
Officer of CAMC.
Please note that an employee's employment and compensation can be terminated at
any time, with or without cause and with or without notice, at the option of
either CAMC or the employee, and the "at-will" nature of such employment cannot
be changed by any verbal representation or assurance, by implication, or based
upon longevity of service or any other factor. In order to be eligible for any
bonus contemplated by this Compensation Plan, whether related to production,
profitability, performance or otherwise, you must be employed by CAMC on the
date of distribution of such bonus.
This Compensation Plan is the sole, entire and complete document relating in any
way to the subject matter hereof, and expressly supersedes any prior or
contemporaneous agreements or representations, whether oral or written.
/s/ Michael W. Perry By: /s/ Richard H. Wohl
Michael W. Perry Name: Richard H. Wohl
Executive Vice President and Title: Senior Vice President, General
Chief Operating Officer Counsel and Secretary
Date: March 19, 1996
2
<PAGE>
SCHEDULE B
----------
(Production/Profitability Bonus)
<TABLE>
<CAPTION>
1996 Earnings per Share (fully diluted)
for CWM Mortgage Holdings, Inc. Profitability Bonus Amount
- --------------------------------------- --------------------------
<S> <C>
$1.20 or less $0
$1.21 to $1.30 $20,000 to $29,999
$1.31 to $1.40 $30,000 to $39,999
$1.41 to $1.50 $40,000 to $49,999
$1.51 to $1.60 $50,000 to $59,999
$1.61 or more $60,000
</TABLE>
Earnings per share for CWM Mortgage Holdings, Inc. shall be determined on the
basis of the annual audit conducted by CWM's independent accountants.
If earnings per share for CWM Mortgage Holdings, Inc. fall between any two
threshold amounts set forth above, the Profitability Bonus Amount payable shall
be interpolated by the corresponding percentage.
<PAGE>
SCHEDULE C
----------
(Discretionary Bonus)
1. Potential Discretionary Bonus Amount: From $0 up to $125,000, based on your
------------------------------------
manager's evaluation of your performance.
2. Bonus Discount Factor for Company Earnings:
------------------------------------------
<TABLE>
<CAPTION>
1996 Earnings per Share (fully diluted)
for CWM Mortgage Holdings, Inc. Discretionary Bonus Amount
- --------------------------------------- --------------------------
<S> <C>
less than $1.00 0%
$1.00 to $1.24 50%
$1.25 to $1.34 75%
$1.35 greater than 100%
</TABLE>
Earnings per share for CWM Mortgage Holdings, Inc. shall be determined on the
basis of the annual audit conducted by CWM's independent accountants.
If earnings per share for CWM Mortgage Holdings, Inc. fall between any two
threshold amounts set forth above, the Bonus Discount Factor shall NOT be
interpolated by the corresponding percentage.
3. Actual Discretionary Bonus Amount.
---------------------------------
The Actual Discretionary Bonus Amount shall be calculated by multiplying
(x) the Potential Discretionary Bonus Amount in Part 1 above (from $0 up to
$125,000) times (y) the Bonus Discount Factor determined pursuant to Part 2
-----
above.
Example: $75,000 (Potential Discretionary Bonus Amount) x 50% ($1.20 per
------- share earnings for 1996) = $37,500 (Actual Discretionary Bonus
Amount).
<PAGE>
EXHIBIT 10.3
COMPENSATION PLAN
-----------------
Name: CARMELLA L. GRAHN
Effective Date: January 1, 1996
Effective Period: Calendar Year 1996
. Title: Senior Vice President and Chief Accounting Officer
Description of Key Individual and Department/Business Unit Goals: See
Schedule A.
----------
. Base Salary: $165,000 per annum.
. Production/Profitability Bonus:
*Maximum Amount: $60,000 Minimum Amount: $0
*Criteria: See Schedule B.
----------
. Discretionary Bonus:
*Maximum Amount: $125,000 Minimum Amount: $0
*Criteria: See Schedule C.
----------
. Regular Benefits: Standard Countrywide Asset Management Corp. ("CAMC")
dental, medical and insurance plans. Eligible for participation in CAMC
401(k) plan on the first day of the calendar quarter following completion
of one year of service.
. Additional Benefits: Standard Countrywide senior executive benefits
(deferred compensation plan, etc.)
. Vacation: Three (3) weeks per year.
<PAGE>
This Compensation Plan is intended to outline the general terms of the base
salary, bonus and benefits that will apply to your position during the period
specified above. This Compensation Plan should not be construed as a contract
of employment and may be amended or revised at any time by the Chief Operating
Officer of CAMC.
Please note that an employee's employment and compensation can be terminated at
any time, with or without cause and with or without notice, at the option of
either CAMC or the employee, and the "at-will" nature of such employment cannot
be changed by any verbal representation or assurance, by implication, or based
upon longevity of service or any other factor. In order to be eligible for any
bonus contemplated by this Compensation Plan, whether related to production,
profitability, performance or otherwise, you must be employed by CAMC on the
date of distribution of such bonus.
This Compensation Plan is the sole, entire and complete document relating in any
way to the subject matter hereof, and expressly supersedes any prior or
contemporaneous agreements or representations, whether oral or written.
/s/ Michael W. Perry By: /s/ Carmella L. Grahn
Michael W. Perry Name: Carmella L. Grahn
Executive Vice President and Title: Senior Vice President and Chief
Chief Operating Officer Accounting Officer
Date: March 20, 1996
2
<PAGE>
SCHEDULE B
----------
(PRODUCTION/PROFITABILITY BONUS)
<TABLE>
<CAPTION>
1996 EARNINGS PER SHARE (FULLY DILUTED)
FOR CWM MORTGAGE HOLDINGS, INC. PROFITABILITY BONUS AMOUNT
- --------------------------------------- --------------------------
<S> <C>
$1.20 OR LESS $0
$1.21 TO $1.30 20,000 TO $29,999
$1.31 TO $1.40 30,000 TO $39,999
$1.41 TO $1.50 40,000 TO $49,999
$1.51 TO $1.60 50,000 TO $59,999
$1.61 OR MORE $60,000
</TABLE>
Earnings per share for CWM Mortgage Holdings, Inc. shall be determined on the
basis of the annual audit conducted by CWM's independent accountants.
If earnings per share for CWM Mortgage Holdings, Inc. fall between any two
threshold amounts set forth above, the Profitability Bonus Amount payable shall
be interpolated by the corresponding percentage.
<PAGE>
SCHEDULE C
----------
(DISCRETIONARY BONUS)
1. DETERMINATION OF POTENTIAL DISCRETIONARY BONUS AMOUNT:
------------------------------------------------------
<TABLE>
<CAPTION>
MAXIMUM POTENTIAL APPLICABLE BASE
DISCRETIONARY BONUS AMOUNT BONUS AMOUNT FOR PERFORMANCE PERCENTAGE:
GOAL/OBJECTIVE (125% OF BASE BONUS) CALCULATION PURPOSES EXCELLENT/GOOD/SATISFACTORY/POOR
-------------- -------------------------- -------------------- ------------------------------
<S> <C> <C> <C>
A. MASTER SERVICING/CREDIT
LOSS MITIGATION $ 62,500 $ 50,000 125% / 100% / 70% / 0%
B. COST CONTROL $ 15,625 $ 12,500 125% / 100% / 70% / 0%
C. FINANCIAL ACCOUNTING
AND PROJECTIONS $ 15,625 $ 12,500 125% / 100% / 70% / 0%
D. TAX STRUCTURE $ 15,625 $ 12,500 125% / 100% / 70% / 0%
E. SUBJECTIVE COMPONENT $ 15,625 $ 12,500 125% / 100% / 70% / 0%
-------- --------
TOTALS: $125,000 $100,000
- ------
</TABLE>
The Potential Discretionary Bonus Amount shall be calculated by (1)
multiplying (x) the Performance Percentage for each Goal/Objective times
-----
(y) the Applicable Base Bonus Amount for such Goal/Objective, and (2)
adding all sums determined pursuant to the preceding clause (1) for each
Goal/Objective. the Maximum Potential Discretionary Bonus Amount shall be
$125,000.
2. Bonus Discount Factor For Company Earnings:
-------------------------------------------
<TABLE>
<CAPTION>
1996 Earnings Per Share (Fully Diluted)
for CWM Mortgage Holdings, Inc. Discretionary Bonus Amount
--------------------------------------- --------------------------
<S> <C>
less than $1.00 0%
$1.00 TO $1.24 50%
$1.25 TO $1.34 75%
more than $1.35 100%
</TABLE>
Earnings per share for CWM Mortgage Holdings, Inc. shall be determined on
the basis of the annual audit conducted by CWM's independent accountants.
If earnings per share for CWM Mortgage Holdings, Inc. fall between any two
threshold amounts set forth above, the Bonus Discount Factor shall NOT be
interpolated by the corresponding percentage.
3. Actual Discretionary Bonus Amount.
----------------------------------
The Actual Discretionary Bonus Amount shall be calculated by multiplying
(x) the Potential Discretionary Bonus Amount determined pursuant to Part 1
above (from $0 up to $125,000) times (y) the Bonus Discount Factor
-----
determined pursuant to Part 2 above.
Example: $75,000 (Potential Discretionary Bonus Amount) x 50% ($1.20 per
-------
share earnings for 1996) = $37,500 (Actual Discretionary Bonus
Amount).
<PAGE>
SECOND AMENDMENT TO
FACILITY I CREDIT AGREEMENT EXHIBIT 10.4
--------------------------- ----
THIS SECOND AMENDMENT TO FACILITY I CREDIT AGREEMENT dated as of January 4,
1996 (this "Amendment") is made by and among CWM MORTGAGE HOLDINGS, INC., a
Delaware corporation ("CWM"), INDEPENDENT NATIONAL MORTGAGE CORPORATION, a
Delaware corporation ("INMC"), INDEPENDENT LENDING CORPORATION, a Delaware
corporation ("ILC" and, together with CWM and INMC, the "Companies"), FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association ("First
Union") in its individual capacity, THE BANK OF NEW YORK, a New York banking
corporation ("BNY"), CREDIT LYONNAIS, CAYMAN ISLANDS BRANCH, a ______________
("Credit Lyonnais"), THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association ("FNB Chicago"), GUARANTY FEDERAL BANK F.S.B., a _____________
("Guaranty Federal"), HIBERNIA NATIONAL BANK, a national banking association
("Hibernia"), NATWEST BANK N.A., a national banking association ("NatWest"),
NATIONSBANK OF TEXAS, N.A., a national banking association ("NationsBank") and
DRESDNER BANK AG, LOS ANGELES AGENCY & GRAND CAYMAN BRANCH, a ___________
("Dresdner") (First Union in its individual capacity, BNY, Credit Lyonnais, FNB
Chicago, Guaranty Federal, Hibernia, NatWest, NationsBank and Dresdner, each
together with its permitted successors and assigns, a "Lender" and,
collectively, the "Lenders"), and First Union as administrative agent for the
Lenders (in such capacity, the "Administrative Agent").
STATEMENT OF PURPOSE
--------------------
WHEREAS, each of the parties hereto other than Dresdner are parties to a
Facility I Credit Agreement dated as of May 30, 1995, as amended by a First
Amendment to Facility I Credit Agreement dated as of September 25, 1995 (as so
amended, the "Credit Agreement"); and
WHEREAS, Dresdner has become a party to and a Lender under the Credit
Agreement and all other agreements and documents entered into in connection
therewith pursuant to the terms of Paragraph 11(i) of the Credit Agreement, as
evidenced by that certain Assignment Agreement of even date herewith between
Dresdner and First Union (the "Assignment"), such assignment being in the form
attached as ANNEX I hereto; and
WHEREAS, the parties hereto wish to amend the Credit Agreement to provide
for the inclusion of Dresdner as a party thereto and a Lender thereunder; and
WHEREAS, subject to and upon the terms and conditions herein set forth, the
Lenders are willing to make available, and to continue to make available, to the
Companies the credit facilities provided for in the Credit Agreement, as amended
hereby;
NOW, THEREFORE, in consideration of the premises and agreements contained
herein, and for good and valuable consideration,
<PAGE>
the receipt and sufficiency of which are acknowledged by the parties hereto, the
parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined shall have
the respective meanings provided to such terms in the Credit Agreement, as
amended hereby.
2. The Credit Agreement is hereby amended to include, as a party thereto,
Dresdner, and the term "Lenders" as defined in the preamble to and Paragraph 12
of the Credit Agreement is hereby amended to include Dresdner, and as of the
date hereof, Dresdner shall be deemed to be a "Lender" under the Credit
Agreement and under each agreement and document entered into in connection
therewith.
3. The Commitment Schedule (Facility I Credit Agreement) contained as
Schedule I-1 to the Addendum is hereby deleted and the Commitment Schedule
(Facility I Credit Agreement) attached as EXHIBIT A to this Amendment is
substituted therefor.
4. The Schedule of Addresses contained as Schedule II to the Addendum is
hereby deleted and the Schedule of Addresses attached as EXHIBIT B to this
Amendment is substituted therefor.
5. This Amendment shall become effective as of the date hereof, provided
that the Administrative Agent shall have received by such date the following
items:
(A) A copy of this Amendment executed by each of the Companies, each of the
Lenders, and the Administrative Agent (whether such parties shall have
signed the same or different copies);
(B) A Facility I Promissory Note of even date herewith, as duly executed by
the Companies, such note to be payable by the Companies to the order of
Dresdner and to be in the form of ANNEX II hereto (such note being
considered to be a note for all purposes);
(C) A copy of the Assignment, as duly executed by First Union and Dresdner
and acknowledged by the Companies and the Administrative Agent; and
(D) Certificates of even date herewith signed by the President or any Vice
President of each of CWM, INMC and ILC, and attested to by the Secretary or
any Assistant Secretary of each of CWM, INMC and ILC, certifying that (i)
the Articles, Bylaws and resolutions of each such party previously
delivered to the Administrative Agent remain in full force and effect
except as provided therein, (ii) such party remains in good standing, (iii)
all representations and warranties of such party previously made to the
Lenders remain true, complete and accurate, and (iv) no Event of Default or
Potential Default has occurred and is continuing under any of the Credit
Documents.
<PAGE>
6. The parties hereto agree and acknowledge that on the date hereof, to
the extent necessary, the Administrative Agent shall reallocate the Loans made
by First Union and outstanding on such date among all the Lenders so that as of
such date the ratios of (i) the aggregate principal amount of Tranche A Loans
outstanding from any Lender to the aggregate principal amount of Tranche A Loans
outstanding from all the Lenders and (ii) the aggregate principal amount of
Tranche B Loans outstanding from any Lender to the aggregate principal amount of
Tranche B Loans outstanding from all the Lenders, shall be equal to the ratio of
such Lender's Maximum Commitment to the Aggregate Facility Commitment after
giving effect to this Amendment, and the Lenders shall make such payments among
themselves as may be necessary to effect such transactions.
7. This Amendment is limited and, except as set forth herein, shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement, or any other document or instrument entered into in connection
therewith.
8. This Amendment may be executed in any number of counterparts by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which together
shall constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Companies and the Administrative Agent.
9. This Amendment and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the State of
North Carolina.
10. From and after the date hereof, all references in the Credit Agreement,
and any other document or instrument entered into in connection therewith, to
the Credit Agreement shall be deemed to be references to the Credit Agreement as
amended hereby. Dresdner hereby assumes, and agrees to be bound under and by,
the terms of the Credit Agreement and all agreements and documents entered into
in connection therewith from and after the date hereof. Dresdner shall be
considered to be a "Lender" for all purposes under the Security Agreement, the
Uniform Commercial Code financing statements filed pursuant thereto, the
Custodial Agreement and the other Credit Documents.
11. THE LENDERS, THE ADMINISTRATIVE AGENT, AND THE COMPANIES EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED
BY LAW, THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AMENDMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS AND THE ADMINISTRATIVE
AGENT TO ENTER INTO THIS AMENDMENT.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment to be duly executed and delivered as of the date first above
written.
CWM MORTGAGE HOLDINGS, INC.
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: Exec. Vice President &
Chief Operating Officer
INDEPENDENT NATIONAL MORTGAGE CORPORATION
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: President & Chief Executive
Officer
INDEPENDENT LENDING CORPORATION
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: President & Chief Executive
Officer
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA,
as Administrative Agent and as a
Lender
By: /s/ Carolyn Eskridge
Name: Carolyn Eskridge
Title: SVP
THE BANK OF NEW YORK
By: /s/ Cynthia E. Crites
Name: Cynthia E. Crites
Title: AVP
<PAGE>
CREDIT LYONNAIS, CAYMAN ISLANDS BRANCH
By: /s/ William J. Fischer
Name: William J. Fischer
Title: Authorized Signatory
DRESDNER BANK AG, LOS ANGELES
AGENCY & GRAND CAYMAN BRANCH
By: /s/ Vitol Wiacek
Name: Vitol Wiacek
Title: Assistant Vice President
By: /s/ Dennis G. Blank
Name: Dennis G. Blank
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ J.S. Winn, Jr.
Name: J.S. Winn, Jr.
Title: SVP
GUARANTY FEDERAL BANK F.S.B.
By: /s/ Abbie Y. Tidmore
Name: Abbie Y. Tidmore
Title: Vice President
HIBERNIA NATIONAL BANK
By: /s/ Colleen Lacy
Name: Colleen Lacy
Title: Vice President
NATWEST BANK N.A.
By: /s/ Robert L. Klein
Name: Robert L. Klein
Title: AVP
NATIONSBANK OF TEXAS, N.A.
By: /s/ Mary Pat Riggins
Name: Mary Pat Riggins
Title: Vice President
<PAGE>
EXHIBIT 10.5
SECOND AMENDMENT TO
FACILITY II CREDIT AGREEMENT
----------------------------
THIS SECOND AMENDMENT TO FACILITY II CREDIT AGREEMENT dated as of January
4, 1996 (this "Amendment") is made by and among CWM MORTGAGE HOLDINGS, INC., a
Delaware corporation ("CWM"), INDEPENDENT NATIONAL MORTGAGE CORPORATION, a
Delaware corporation ("INMC"), INDEPENDENT LENDING CORPORATION, a Delaware
corporation ("ILC" and, together with CWM and INMC, the "Companies"), FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association ("First
Union") in its individual capacity, THE BANK OF NEW YORK, a New York banking
corporation ("BNY"), CREDIT LYONNAIS, CAYMAN ISLANDS BRANCH, a ______________
("Credit Lyonnais"), THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association ("FNB Chicago"), GUARANTY FEDERAL BANK F.S.B., a _____________
("Guaranty Federal"), HIBERNIA NATIONAL BANK, a national banking association
("Hibernia"), NATWEST BANK N.A., a national banking association ("NatWest"),
NATIONSBANK OF TEXAS, N.A., a national banking association ("NationsBank") and
DRESDNER BANK AG, LOS ANGELES AGENCY & GRAND CAYMAN BRANCH, a __________
("Dresdner") (First Union in its individual capacity, BNY, Credit Lyonnais, FNB
Chicago, Guaranty Federal, Hibernia, NatWest, NationsBank and Dresdner, each
together with its permitted successors and assigns, a "Lender" and,
collectively, the "Lenders"), and First Union as administrative agent for the
Lenders (in such capacity, the "Administrative Agent").
STATEMENT OF PURPOSE
--------------------
WHEREAS, each of the parties hereto other than Dresdner are parties to a
Facility II Credit Agreement dated as of May 30, 1995, as amended by a First
Amendment to Facility II Credit Agreement dated as of September 25, 1995 (as so
amended, the "Credit Agreement"); and
WHEREAS, Dresdner has become a party to and a Lender under the Credit
Agreement and all other agreements and documents entered into in connection
therewith pursuant to the terms of Paragraph 15(i) of the Credit Agreement, as
evidenced by that certain Assignment Agreement of even date herewith between
Dresdner and First Union (the "Assignment"), such Assignment being in the form
attached as ANNEX I hereto; and
WHEREAS, the parties hereto wish to amend the Credit Agreement to provide
for the inclusion of Dresdner as a party thereto and a Lender thereunder; and
WHEREAS, subject to and upon the terms and conditions herein set forth, the
Lenders are willing to make available, and to continue to make available, to the
Companies the credit facilities provided for in the Credit Agreement, as amended
hereby;
NOW, THEREFORE, in consideration of the premises and agreements contained
herein, and for good and valuable consideration,
<PAGE>
the receipt and sufficiency of which are acknowledged by the parties hereto, the
parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined shall have
the respective meanings provided to such terms in the Credit Agreement, as
amended hereby.
2. The Credit Agreement is hereby amended to include, as a party thereto,
Dresdner, and the term "Lenders" as defined in the preamble to and Paragraph 16
of the Credit Agreement is hereby amended to include Dresdner, and as of the
date hereof, Dresdner shall be deemed to be a "Lender" under the Credit
Agreement and under each agreement and document entered into in connection
therewith.
3. The Commitment Schedule (Facility II Credit Agreement) contained as
Schedule I-2 to the Addendum is hereby deleted and the Commitment Schedule
(Facility II Credit Agreement) attached as EXHIBIT A to this Amendment is
substituted therefor.
4. The Schedule of Addresses contained as Schedule II to the Addendum is
hereby deleted and the Schedule of Addresses attached as EXHIBIT B to this
Amendment is substituted therefor.
5. This Amendment shall become effective as of the date hereof, provided
that the Administrative Agent shall have received by such date the following
items:
(A) A copy of this Amendment executed by each of the Companies, each of
the Lenders, and the Administrative Agent (whether such parties shall have
signed the same or different copies);
(B) A Facility II Promissory Note of even date herewith, as duly executed
by the Companies, such note to be payable by the Companies to the order of
Dresdner and to be in the form of ANNEX II hereto (such note being
considered to be a Note for all purposes);
(C) A copy of the Assignment, as duly executed by First Union and
Dresdner and acknowledged by the Companies and the Administrative Agent;
and
(D) Certificates of even date herewith signed by the President or any Vice
President of each of CWM, INMC and ILC, and attested to by the Secretary or
any Assistant Secretary of each of CWM, INMC and ILC, certifying that (i)
the Articles, Bylaws and resolutions of each such party previously
delivered to the Administrative Agent remain in full force and effect
except as provided therein, (ii) such party remains in good standing, (iii)
all representations and warranties of such party previously made to the
Lenders remain true, complete and accurate, and (iv) no Event of Default or
Potential Default has occurred and is continuing under any of the Credit
Documents.
<PAGE>
6. The parties hereto agree and acknowledge that on the date hereof, to the
extent necessary, the Administrative Agent shall reallocate the Loans made by
First Union and outstanding on such date among all the Lenders so that as of
such date the ratios of (i) the aggregate principal amount of Tranche A Loans
outstanding from any Lender to the aggregate principal amount of Tranche A Loans
outstanding from all the Lenders, (ii) the aggregate principal amount of Tranche
B Loans outstanding from any Lender to the aggregate principal amount of Tranche
B Loans outstanding from all the Lenders, (iii) the aggregate principal amount
of Tranche C Loans outstanding from any Lender to the aggregate principal amount
of Tranche C Loans outstanding from all the Lenders, (iv) the aggregate
principal amount of Tranche D Loans outstanding from any Lender to the aggregate
principal amount of Tranche D Loans outstanding from all the Lenders, (v) the
aggregate principal amount of Tranche E Loans outstanding from any Lender to the
aggregate principal amount of Tranche E Loans outstanding from all the Lenders,
and (vi) the aggregate principal amount of Tranche F Loans outstanding from any
Lender to the aggregate principal amounts of all Tranche F Loans outstanding
from all the Lenders, shall be equal to the ratio of such Lender's Maximum
Commitment to the Aggregate Facility Commitment after giving effect to this
Amendment, and the Lenders shall make such payments among themselves as may be
necessary to effect such transactions.
7. This Amendment is limited and, except as set forth herein, shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement, or any other document or instrument entered into in connection
therewith.
8. This Amendment may be executed in any number of counterparts by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which together
shall constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Companies and the Administrative Agent.
9. This Amendment and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the State of
North Carolina.
10. From and after the date hereof, all references in the Credit Agreement,
and any other document or instrument entered into in connection therewith, to
the Credit Agreement shall be deemed to be references to the Credit Agreement as
amended hereby. Dresdner hereby assumes, and agrees to be bound under and by,
the terms of the Credit Agreement and all agreements and documents entered into
in connection therewith from and after the date hereof. Dresdner shall be
considered to be a "Lender" for all purposes under the Security Agreement, the
Uniform Commercial Code financing statements filed pursuant thereto, the
Custodial Agreement and the other Credit Documents.
<PAGE>
11. THE LENDERS, THE ADMINISTRATIVE AGENT, AND THE COMPANIES EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED
BY LAW, THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AMENDMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS AND THE ADMINISTRATIVE
AGENT TO ENTER INTO THIS AMENDMENT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment to be duly executed and delivered as of the date first above
written.
CWM MORTGAGE HOLDINGS, INC.
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: Exec. Vice President &
Chief Operating Officer
INDEPENDENT NATIONAL MORTGAGE CORPORATION
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: President & Chief Executive
Officer
INDEPENDENT LENDING CORPORATION
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: President & Chief Executive
Officer
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA,
as Administrative Agent and as a Lender
By: /s/ Carolyn Eskridge
Name: Carolyn Eskridge
Title: SVP
THE BANK OF NEW YORK
By: /s/ Cynthia E. Crites
Name: Cynthia E. Crites
Title: AVP
<PAGE>
CREDIT LYONNAIS, CAYMAN ISLANDS BRANCH
By: /s/ William J. Fischer
Name: William J. Fischer
Title: Authorized Signatory
DRESDNER BANK AG, LOS ANGELES
AGENCY & GRAND CAYMAN BRANCH
By: /s/ Vitol Wiacek
Name: Vitol Wiacek
Title: Assistant Vice President
By: /s/ Dennis G. Blank
Name: Dennis G. Blank
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ J.S. Winn, Jr.
Name: J.S. Winn, Jr.
Title: SVP
GUARANTY FEDERAL BANK F.S.B.
By: /s/ Abbie Y. Tidmore
Name: Abbie Y. Tidmore
Title: Vice President
HIBERNIA NATIONAL BANK
By: /s/ Colleen Lacy
Name: Colleen Lacy
Title: Vice President
NATWEST BANK N.A.
By: /s/ Robert L. Klein
Name: Robert L. Klein
Title: AVP
NATIONSBANK OF TEXAS, N.A.
By: /s/ Mary Pat Riggins
Name: Mary Pat Riggins
Title: Vice President
<PAGE>
Exhibit 10.6
THIRD AMENDMENT TO
FACILITY I CREDIT AGREEMENT
---------------------------
THIS THIRD AMENDMENT TO FACILITY I CREDIT AGREEMENT dated as of March 15,
1996 (this "Amendment") is made by and among CWM MORTGAGE HOLDINGS, INC., a
Delaware corporation ("CWM"), INDEPENDENT NATIONAL MORTGAGE CORPORATION, a
Delaware corporation ("INMC"), and INDEPENDENT LENDING CORPORATION, a Delaware
corporation ("ILC" and, together with CWM and INMC, the "Companies"), FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association ("First
Union"), in its individual capacity, THE BANK OF NEW YORK, a New York banking
corporation ("BNY"), CREDIT LYONNAIS, CAYMAN ISLANDS BRANCH, a
--------------
("Credit Lyonnais"), DRESDNER BANK AG, LOS ANGELES AGENCY AND GRAND CAYMAN
BRANCH, a ("Dresdner"), THE FIRST NATIONAL BANK OF CHICAGO, a
----------------
national banking association ("FNB Chicago"), GUARANTY FEDERAL BANK F.S.B., a
("Guaranty Federal"), HIBERNIA NATIONAL BANK, a national banking
- -------------
association ("Hibernia"), NATWEST BANK N.A., a national banking association
("NatWest"), and NATIONSBANK OF TEXAS, N.A., a national banking association
("NationsBank") (First Union in its individual capacity, BNY, Credit Lyonnais,
Dresdner, FNB Chicago, Guaranty Federal, Hibernia, NatWest and NationsBank, each
together with its permitted successors and assigns, a "Lender" and,
collectively, the "Lenders"), and First Union as administrative agent for the
Lenders (in such capacity, the "Administrative Agent").
STATEMENT OF PURPOSE
--------------------
WHEREAS, each of the parties hereto is a party to a Facility I Credit
Agreement dated as of May 30, 1995, as amended by a First Amendment to Facility
I Credit Agreement dated as of September 25, 1995 and by a Second Amendment to
Facility I Credit Agreement dated as of January 4, 1996 (as so amended, the
"Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement to provide
for the modification of various terms and covenants thereof; and
WHEREAS, subject to and upon the terms and conditions herein set forth, the
Lenders are willing to make available, and to continue to make available, to the
Companies the credit facilities provided for in the Credit Agreement, as amended
hereby;
NOW, THEREFORE, in consideration of the premises and agreements contained
herein, and for good and valuable consideration, the receipt and sufficiency of
which are acknowledged by the parties hereto, the parties hereto hereby agree as
follows:
1. All capitalized terms used herein and not otherwise defined shall have
the respective meanings provided to such terms in the Credit Agreement, as
amended hereby.
<PAGE>
2. Paragraph 1(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"1(a) Lending Limit. Subject to the conditions set forth
--------------
herein, the Lenders severally agree that they shall, from time to time up
to and including the Business Day immediately preceding the Maturity Date,
advance and readvance their respective Percentage Shares of loans (the
"Tranche A Loans" or a "Tranche A Loan") to the Companies in amounts not to
exceed, in the aggregate at any one time outstanding (determined after
giving effect to the other transactions contemplated by the Loan Request
pursuant to which the applicable Tranche A Loan was requested), the lesser
of:
(1) The Aggregate Tranche A Credit Limit; and
(2) The Collateral Value of the Tranche A Borrowing Base minus
the aggregate dollar amount of Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche A Loans (and which are not being repaid
by any Tranche A Loan requested).
Provided, however, that notwithstanding anything contained herein to the
-------- -------
contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding and all Swing Line Loans outstanding exceed the
Aggregate Facility Commitment at such time."
3. Paragraph 2(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"2(a) Lending Limit. Subject to the conditions set forth herein,
-------------
the Lenders severally agree that they shall, from time to time up to and
including the Business Day immediately preceding the Maturity Date, advance
and readvance their respective Percentage Shares of loans (the "Tranche B
Loans" or a "Tranche B Loan") to the Companies in amounts not to exceed, in
the aggregate at any one time outstanding (determined after giving effect
to the other transactions contemplated by the Loan Request pursuant to
which the applicable Tranche B Loan was requested), the lesser of:
(1) The Aggregate Tranche B Credit Limit; and
(2) The Collateral Value of the Tranche B Borrowing Base minus
the aggregate dollar amount of Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche B Loans (and which are not being repaid
by any Tranche B Loan requested).
<PAGE>
Provided, however, that notwithstanding anything contained herein to the
-------- -------
contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding and all Swing Line Loans outstanding exceed the
Aggregate Facility Commitment at such time."
4. The following provisions are hereby added as a new Paragraph 2A of the
Credit Agreement:
"2A. Swing Line Facility.
-------------------
2A(a) Swing Line Lending Limit. Subject to the conditions set forth
------------------------
herein, First Union agrees that it shall, from time to time up to and including
the Business Day immediately preceding the Maturity Date, advance and readvance
loans (the "Swing Line Loans" or a "Swing Line Loan") to the Companies in
amounts not to exceed, in the aggregate at any one time outstanding, the lesser
of:
(1) The Maximum Swing Line Commitment; and
(2) (i) The sum of (A) the Collateral Value of the Tranche A
Borrowing Base and (B) the Collateral Value of the Tranche B Borrowing
Base, minus (ii) the aggregate dollar amount of Regular Loans outstanding;
-----
Provided, however, that:
- -------- -------
i. In calculating the availability of Swing Line Loans under
this Paragraph 2A(a) at any date, the aggregate amount of Swing Line Loans
outstanding shall not include any Swing Line Loans which will be repaid
with Regular Loans to be advanced on such date in accordance with the terms
of this Agreement;
ii. Notwithstanding anything contained herein to the contrary,
at no time may the sum of all Tranche A Loans outstanding, all Tranche B
Loans outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time; and
iii. Notwithstanding anything contained herein to the contrary,
at no time may (A) the sum of all Swing Line Loans outstanding which have
been identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche A Loans, plus all Tranche A Loans
outstanding, exceed the lesser of the Collateral Value of the Tranche A
Borrowing Base or the Aggregate Tranche A Credit Limit; or (B) the sum of
all Swing Line Loans outstanding which have been identified by the
Companies in the applicable Loan Request as being scheduled for repayment
by Tranche B Loans, plus all Tranche B Loans outstanding, exceed the lesser
of the
<PAGE>
Collateral Value of the Tranche B Borrowing Base or the Aggregate Tranche B
Credit Limit.
2A(b) Interest Rate. Each Swing Line Loan shall bear interest at the
-------------
Applicable Corporate Rate which corresponds to the type of Regular Loan
identified by the Companies in the applicable Loan Request as being scheduled to
repay such Swing Line Loan.
2A(c) Payment of Interest. The Companies shall pay to the
Administrative Agent for distribution to First Union interest on Swing Line
Loans outstanding hereunder from the date disbursed to but not including the day
of payment or refunding pursuant to Paragraph 2A(d) below. Interest on Swing
Line Loans shall be payable monthly, in arrears, as provided in Paragraph 3(l)
below.
2A(d) Refunding of Swing Line Loans. Upon demand by First Union,
-----------------------------
Swing Line Loans shall be refunded or participations therein acquired, as
applicable, in accordance with the following provisions. Such refunding or
acquisition will occur no later than 4:00 p.m. (Charlotte, North Carolina time)
on the day of such demand if made before 2:00 p.m. (Charlotte, North Carolina
time) and no later than 12:00 noon (Charlotte, North Carolina time) on the next
succeeding Business Day if demand therefor is made after 2:00 p.m. (Charlotte,
North Carolina time).
(1) Prior to the occurrence of an Event of Default or Potential
Default, Swing Line Loans shall be refunded by the Lenders. Such refundings
shall be made by the Lenders in accordance with their respective Percentage
Shares and shall, thereafter, be reflected as actual Regular Loans of the
Lenders on the books and records of the Administrative Agent. The type of
Regular Loan made by the Lenders in connection with the refunding of any
Swing Line Loan shall be the type of Loan identified by the Companies in
the Loan Request for such Swing Line Loan as being scheduled to repay such
Swing Line Loan.
(2) After the occurrence of any Event of Default or Potential
Default, each Lender (other than First Union) shall irrevocably and
unconditionally purchase from First Union, without recourse or warranty
(except that such outstanding Swing Line Loans in fact were made in
accordance with the provisions of this Agreement, and are not subject to
any Liens arising out of any act of First Union), an undivided interest and
participation in any Swing Line Loans then outstanding, by paying to First
Union, in dollars immediately available to First Union, an amount equal to
such Lender's Percentage Share of such Swing Line Loans, and thereafter,
except as otherwise provided in the second succeeding sentence, the
Lenders' respective interests in such Swing Line Loans, and the remaining
interest of First Union in such Swing Line Loans, shall in all respects be
treated as Regular Loans under this Agreement of the type identified by the
Companies in the Loan Request for such Swing Line Loan as being scheduled
to repay such Swing Line Loan, but such Swing Line
<PAGE>
Loans shall continue to be evidenced by the Note which evidences the Swing
Line Loans. If any Lender does not pay any amount which it is required to
pay to First Union, First Union shall be entitled to recover such amount on
demand from such Lender, together with interest thereon, at the Applicable
Corporate Rate, for each day from the date of such demand, if made prior to
2:00 p.m. (Charlotte, North Carolina time) on any Business Day, or, if made
after 2:00 p.m. from the next Business Day following the date of such
demand, until the date such amount is paid to First Union by such Lender.
If such Lender does not pay such amount forthwith upon First Union's demand
therefor, and until such time as such Lender makes the required payment,
First Union shall be deemed to continue to have outstanding a Swing Line
Loan in the amount of such unpaid participation obligation for all purposes
of this Agreement other than those provisions requiring such other Lender
to purchase a participation therein. First Union shall upon the request of
such Lender, furnish to such Lender a participation certificate evidencing
the participation purchased by such Lender.
(3) [Intentionally Omitted].
(4) Notwithstanding anything contained in this Agreement to the
contrary, no Lender shall be obligated to refund or acquire a participation
interest in any Swing Line Loans made by First Union unless (i) First Union
believed in good faith that all conditions specified in Paragraph 2A(a)
above and Paragraph 5 below to the making of such Swing Line Loans were
satisfied at the time such Swing Line Loans were made, or (ii) such Lender
had actual knowledge that any such condition had not been satisfied and
failed to notify First Union in writing prior to the time First Union made
such Swing Line Loan that First Union was not authorized to make a Swing
Line Loan until such condition had been satisfied, or (iii) the
satisfaction of any such condition that was not satisfied had been waived
by the requisite Lenders in accordance with the provisions of this
Agreement, or the making of such Swing Line Loan in the face of such non-
satisfied condition or conditions had been consented to by the requisite
Lenders in accordance with the provisions of this Agreement."
5. Paragraph 3(j)(1) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
(1) (a) If the Companies desire to borrow a Swing Line Loan
hereunder, the Companies shall make a Loan Request to the
Administrative Agent no later than 4:45 p.m. (Charlotte, North
Carolina time) on the proposed funding date, which Loan Request shall
identify the type of Regular Loan which is scheduled to repay such
Swing Line Loan. First Union shall make available the amount of the
proposed Swing Line Loan by crediting the amount
<PAGE>
thereof in immediately available same day funds to the Funding Account
on such date.
(b) If the Companies desire to borrow a Corporate Rate Loan
(other than a Swing Line Loan) hereunder, the Companies shall make a
Loan Request to the Administrative Agent no later than 2:00 p.m.
(Charlotte, North Carolina time) on the proposed funding date, which
Loan Request shall be forwarded promptly by the Administrative Agent
to the Lenders by facsimile transmission no later than 2:45 p.m.
(Charlotte, North Carolina time) on such date. The applicable Lenders
shall make available the amount of their respective Percentage Shares
of the proposed Corporate Rate Loan by crediting the amount thereof in
immediately available same day funds to the Funding Account no later
than 3:30 p.m. (Charlotte, North Carolina time) on such date."
6. Paragraph 3(j)(3) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"(3) Each Corporate Rate Loan (other than a Swing Line Loan) and
each Eurodollar Loan shall be allocated among and funded by the Lenders in
accordance with their applicable Percentage Shares. The failure of any
Lender to make its Percentage Share of any Regular Loan to be made by it as
part of any borrowing shall not relieve any other Lender of its obligation
hereunder to advance its applicable portion of the principal amount thereof
but no Lender shall be responsible for the failure of any other Lender to
make the advance required of it."
7. Paragraph 3(k) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"3(k) Notes. The joint and several obligations of the Companies to
-----
repay the Loans shall be evidenced by (i) notes payable to the order of
each Lender, as applicable, in the form set forth as Exhibit A-1 in the
-----------
Addendum, and (ii) a Facility I Swing Line Promissory Note payable to the
order of First Union, in form and content acceptable to First Union
(collectively, the "Notes")."
8. Paragraph 3(n) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"3(n) Borrowing Base Conformity; Mandatory Prepayments.
------------------------------------------------
<PAGE>
(1) The Companies shall cause to be maintained with the
Collateral Agent a Tranche A Borrowing Base such that the Collateral Value
of the Tranche A Borrowing Base is not less than, at any date, the sum of
the aggregate dollar amount of outstanding Tranche A Loans plus the
aggregate dollar amount of outstanding Swing Line Loans which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche A Loans.
(2) The Companies shall cause to be maintained with the
Collateral Agent a Tranche B Borrowing Base such that the Collateral Value
of the Tranche B Borrowing Base is not less than, at any date, the sum of
the aggregate dollar amount of outstanding Tranche B Loans plus the
aggregate dollar amount of outstanding Swing Line Loans which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche B Loans.
(3) The Companies shall prepay Loans to the Administrative Agent
on behalf of the Lenders, upon telephonic or facsimile demand by the
Administrative Agent, on any day (A) in the amount by which the aggregate
principal amount of outstanding Tranche A Loans, plus the aggregate
principal amount of outstanding Swing Line Loans which have been identified
by the Companies in the applicable Loan Request as being scheduled for
repayment by Tranche A Loans, exceeds the Collateral Value of the Tranche A
Borrowing Base, (B) in the amount by which the aggregate principal amount
of outstanding Tranche B Loans, plus the aggregate principal amount of
outstanding Swing Line Loans which have been identified by the Companies in
the applicable Loan Request as being scheduled for repayment by Tranche B
Loans, exceeds the Collateral Value of the Tranche B Borrowing Base, or
(C) in the amount by which the sum of the aggregate principal amount of
outstanding Tranche A Loans, Tranche B Loans and Swing Line Loans exceeds
the Aggregate Facility Commitment; said prepayment to be made on the date
on which demand is made by the Administrative Agent if made prior to 12:00
p.m. (Charlotte, North Carolina time) or, if made later than 12:00 p.m.
(Charlotte, North Carolina time), before 12:00 p.m. (Charlotte, North
Carolina time) on the next Business Day.
(4) The Companies shall prepay Corporate Rate Loans to the
Administrative Agent on behalf of Lenders, upon telephonic or facsimile
demand by the Administrative Agent, on any day in the amount equal to the
lesser of (y) the aggregate principal amount of outstanding Loans or (z)
the amount by which 1. the maximum amount which may be outstanding at any
-
time as Tranche A Loans and Tranche B Loans under the Facility
<PAGE>
II Agreement exceeds 2. the aggregate principal amount of outstanding
-
Tranche A Loans and Tranche B Loans under the Facility II Agreement;
provided, however, that in no event shall this Paragraph 3(n)(4) be
-------- -------
construed to require the Companies to prepay Eurodollar Loans prior to the
expiration of the applicable Interest Period therefor.
(5) If at such time as the Companies shall be required to prepay
Loans under this Paragraph 3(n) there shall not have occurred and be
continuing an Event of Default, in lieu of prepaying the Loans as required,
the Companies may deliver to the Collateral Agent or the Administrative
Agent, as applicable, additional Collateral such that after giving effect
to the inclusion of such Collateral in the respective borrowing bases, the
Companies shall be in compliance with the requirements of subparagraphs
(1) and (2) above."
9. Paragraph 3(o) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"3(o) Nature and Place of Payments. All payments made on account of
----------------------------
the Obligations shall be made to the Administrative Agent for distribution
to the Lenders, and the Administrative Agent is hereby irrevocably
authorized to debit the Settlement Account and distribute amounts held
therein as provided in Paragraph 3(s) below on account thereof. All
payments made on account of the Obligations shall be made without setoff or
counterclaim in lawful money of the United States of America in immediately
available same day funds, free and clear of and without deduction for any
taxes, fees or other charges of any nature whatsoever imposed by any taxing
authority. If such payments (other than principal payments made via wire
transfers under the Federal Reserve System on Swing Line Loans held solely
by First Union, i.e., the other Lenders have not purchased participations
therein pursuant to Paragraph 3A(d)(2) above) are received by the
Administrative Agent by 3:30 p.m. on any Business Day (Charlotte, North
Carolina time) such payment will be credited on such Business Day. If a
payment (other than principal payments made via wire transfers under the
Federal Reserve System on Swing Line Loans held solely by First Union) is
received after 3:30 p.m. (Charlotte, North Carolina time) by the
Administrative Agent, such payment will be credited on the next succeeding
Business Day and interest thereon shall be payable at the then applicable
rate until credited, provided, that the Administrative Agent shall use its
--------
best efforts to credit such payment on the Business Day received. Principal
payments via wire transfers under the Federal Reserve System on Swing Line
Loans held solely by First Union will be credited
<PAGE>
as of the Business Day on which First Union receives credit for such funds
in its account with the Federal Reserve Bank. All amounts received by the
Administrative Agent on account of the Obligations shall be disbursed by
the Administrative Agent to the applicable Lenders by wire transfer on the
date of receipt if received by the Administrative Agent by the applicable
deadline for payment thereof as specified above, or if received later, on
the next succeeding Business Day. If any payment required to be made by the
Companies hereunder becomes due and payable on a day other than a Business
Day, the due date thereof shall be extended to the next succeeding Business
Day and interest thereon shall be payable at the then applicable rate
during such extension."
10. Paragraph 3(s) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"3(s) Allocation of Payments Received.
-------------------------------
(1) Prior to the occurrence of an Event of Default and
acceleration of all Loans outstanding hereunder or termination of the
commitments of the Lenders to advance Loans hereunder, principal amounts
received by the Administrative Agent with respect to Loans shall be
allocated (i) first, to First Union in payment of any Swing Line Loans
-----
which have not been refunded with Regular Loans, then (ii) next, among the
----
Lenders on account of the Obligations pro rata in accordance with their
respective Percentage Shares.
(2) Following the occurrence of an Event of Default and
acceleration of all Loans outstanding hereunder or termination of the
commitments of the Lenders to advance Loans hereunder, all amounts received
by the Administrative Agent on account of the Obligations shall be
disbursed by the Administrative Agent as follows:
(i) First, to the payment of reasonable costs and
expenses incurred by the Administrative Agent and Collateral Agent in the
performance of their duties and enforcement of their rights under the
Credit Documents, including, without limitation, all reasonable costs and
expenses of collection, reasonable attorneys' fees, court costs and
foreclosure expenses;
(ii) Second, to First Union in payment of any
Swing Line Loans outstanding (A) in which the Lenders are obligated to
purchase participations pursuant to the terms and provisions of Paragraph
2(A)(d)(2) above, (B) which have not been refunded with Regular Loans, and
(C) in which participations have not
<PAGE>
been purchased by the Lenders pursuant to the terms and provisions of
Paragraph 2A(d)(2) above;
(iii) Third, to the Lenders, pro rata in
accordance with their respective Repayment Shares, until the outstanding
Loans and other Obligations shall have been paid in full, provided that all
--------
such amounts described herein shall be applied first to interest and then
to principal, as applicable, provided further that for the sole purpose of
-------- -------
this Paragraph 3(s)(2)(iii), the Lenders' respective Repayment Shares shall
be adjusted to take into account interest which may be owing to any Lender
at a rate determined pursuant to the provisions of Paragraph 3(u) below,
and provided further that for the sole purpose of this Paragraph
-------- -------
3(s)(2)(iii), First Union's Repayment Share shall be adjusted to exclude
Swing Line Loans outstanding which, by application of Paragraph 2A(d)(4)
above, the Lenders are not obligated to refund;
(iv) Fourth, to First Union in payment of any
Swing Line Loans outstanding which, by application of Paragraph 2A(d)(4)
above, the Lenders are not obligated to refund; and
(v) Fifth, to such Persons as may be legally
entitled thereto."
11. Paragraph 8(g) of the Credit Agreement is hereby amended by deleting
the ratio "XX.X:1.0" contained therein and substituting the ratio "XX.X:1.0" in
lieu thereof.
12. Paragraph 9 of the Credit Agreement is hereby amended by adding the
following sentence to the end of the last paragraph thereof:
"Provided, however, that no Lender will be required to purchase a
-------- -------
participation in a Swing Line Loan which, by application of Paragraph
2A(d)(4) above, it would not have been obligated to refund."
13. The definition of the term "Aggregate Facility Commitment" contained
in Paragraph 12 of the Credit Agreement is hereby deleted in its entirety and
the following definition is hereby substituted in lieu thereof:
"'Aggregate Facility Commitment' shall mean, at any time, the sum of the
-----------------------------
Lenders' Maximum Commitments at such time; provided that such sum shall not
-------- ----
exceed $XXX,XXX,XXX at any time."
14. The definitions of the terms "Corporate Rate Loan" and "Corporate Rate
Loans" contained in Paragraph 12 of the Credit agreement are hereby deleted in
their entireties and the following definitions are hereby substituted in lieu
thereof:
<PAGE>
"'Corporate Rate Loan' shall mean a Tranche A Corporate Rate Loan, a
-------------------
Tranche B Corporate Rate Loan or a Swing Line Loan, as applicable."
"'Corporate Rate Loans' shall mean, collectively, Tranche A Corporate Rate
--------------------
Loans, Tranche B Corporate Rate Loans and Swing Line Loans."
15. The definition of the term "Eurodollar Rate" contained in Paragraph 12
of the Credit Agreement is hereby deleted in its entirety and the following
definition is hereby substituted in lieu thereof:
"'Eurodollar Rate' shall mean, with respect to any Eurodollar Loan for the
---------------
Interest Period applicable to such Eurodollar Loan, the arithmetic average
of the rates at which deposits in immediately available U.S. dollars in an
amount equal to the aggregate amount of Eurodollar Loans proposed to be
subject to such rates having a maturity approximately equal to such
Interest Period are offered to or by reference banks in the London
interbank market, as determined by the Administrative Agent by reference to
page 3750 or 4833, as applicable, of the Telerate Systems Incorporated
screen service as of 11:00 a.m. (London time) two Eurodollar Business Days
prior to the first day of such Interest Period."
16. The definitions of the terms "Loan" and "Loans" contained in Paragraph
12 of the Credit Agreement are hereby deleted in their entireties and the
following definitions are hereby substituted in lieu thereof:
"'Loan' shall mean a Tranche A Loan, a Tranche B Loan or a Swing Line Loan,
----
as applicable."
"'Loans' shall mean, collectively, Tranche A Loans, Tranche B Loans and
-----
Swing Line Loans."
17. The following definitions of the terms "Maximum Swing Line
Commitment", "Regular Loan", "Regular Loans", "Swing Line Loan" and "Swing Line
Loans" are hereby added to Paragraph 12 in correct alphabetical order as
follows:
"'Maximum Swing Line Commitment' shall mean with respect to First Union the
-----------------------------
lesser of (i) the excess of its Maximum Commitment over its Percentage
Share of all Regular Loans outstanding, or (ii) the excess of $XX,XXX,XXX
over the aggregate principal amount of outstanding Swing Line Loans under
the Facility II Agreement."
"'Regular Loan' shall mean a Tranche A Loan or a Tranche B Loan, as
------------
applicable."
<PAGE>
"'Regular Loans' shall mean, collectively, Tranche A Loans and Tranche B
-------------
Loans."
"'Swing Line Loan' and 'Swing Line Loans' shall have the meanings given
--------------- ----------------
such terms in Paragraph 2A(a) above."
18. The Commitment Schedule (Facility I Credit Agreement) contained as
Schedule I-1 to the Addendum is hereby deleted and the Commitment Schedule
(Facility I Credit Agreement) attached as EXHIBIT A to this Amendment is
substituted therefor.
19. This Amendment shall become effective as of the date hereof, provided
that the Administrative Agent shall have received by such date the following
items:
(A) A copy of this Amendment executed by each of the Companies, each of
the Lenders, and the Administrative Agent (whether such parties shall have
signed the same or different copies);
(B) A Facility I Swing Line Promissory Note of even date herewith, as duly
executed by the Companies, such note to be payable by the Companies to the
order of First Union and to be in the form of ANNEX I hereto; and
(C) Certificates of even date herewith signed by the President or any Vice
President of each of CWM, INMC and ILC, and attested to by the Secretary or
any Assistant Secretary of each of CWM, INMC and ILC, certifying that
(i) the Articles, Bylaws and resolutions of each such party previously
delivered to the Administrative Agent remain in full force and effect
except as provided therein, (ii) such party remains in good standing,
(iii) all representations and warranties of such party previously made to
the Lenders remain true, complete and accurate, and (iv) no Event of
Default or Potential Default has occurred and is continuing.
20. This Amendment is limited and, except as set forth herein, shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement, or any other document or instrument entered into in connection
therewith.
21. This Amendment may be executed in any number of counterparts by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which together
shall constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Companies and the Administrative Agent.
22. This Amendment and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the State of
North Carolina.
<PAGE>
23. From and after the date hereof, all references in the Credit
Agreement, and any other document or instrument entered into in connection
therewith, to the Credit Agreement shall be deemed to be references to the
Credit Agreement as amended hereby.
24. THE LENDERS, THE ADMINISTRATIVE AGENT, AND THE COMPANIES EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED
BY LAW, THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AMENDMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS AND THE ADMINISTRATIVE
AGENT TO ENTER INTO THIS AMENDMENT.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment to be duly executed and delivered as of the date first above
written.
CWM MORTGAGE HOLDINGS, INC.
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: Exec. Vice President & Chief
Operating Officer
INDEPENDENT NATIONAL MORTGAGE CORPORATION
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: President & Chief Executive
Officer
INDEPENDENT LENDING CORPORATION
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: President & Chief Executive
Officer
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA,
as Administrative Agent and as a Lender
By: /s/ Carolyn Eskridge
Name: Carolyn Eskridge
Title: SVP
THE BANK OF NEW YORK
By: /s/ Cynthia E. Crites
Name: Cynthia E. Crites
Title: AVP
<PAGE>
CREDIT LYONNAIS, CAYMAN ISLANDS BRANCH
By: /s/ William J. Fischer
Name: William J. Fischer
Title: Authorized Signatory
DRESDNER BANK AG, LOS ANGELES AGENCY AND
GRAND CAYMAN BRANCH
By: /s/ Sidney S. Jordan
Name: Sidney S. Jordan
Title: Vice President
By: /s/ Vitol Wiacek
Name: Vitol Wiacek
Title: Asst. Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Ann H. Chudacoff
Name: Ann H. Chudacoff
Title: Vice President
GUARANTY FEDERAL BANK F.S.B.
By: /s/ Abbie Y. Tidmore
Name: Abbie Y. Tidmore
Title: Vice President
HIBERNIA NATIONAL BANK
By: /s/ Edward K. Santos
Name: Edward K. Santos
Title: Vice President
<PAGE>
NATWEST BANK N.A.
By: /s/ Robert L. Klein
Name: Robert L. Klein
Title: Assistant Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Mary Pat Riggins
Name: Mary Pat Riggins
Title: Vice President
<PAGE>
EXHIBIT 10.7
THIRD AMENDMENT TO AMENDMENT TO
FACILITY II CREDIT AGREEMENT
----------------------------
THIS THIRD AMENDMENT TO FACILITY II CREDIT AGREEMENT dated as of March 15,
1996 (this "Amendment") is made by and among CWM MORTGAGE HOLDINGS, INC., a
Delaware corporation ("CWM"), INDEPENDENT NATIONAL MORTGAGE CORPORATION, a
Delaware corporation ("INMC"), and INDEPENDENT LENDING CORPORATION, a Delaware
corporation ("ILC" and, together with CWM and INMC, the "Companies"), FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association ("First
Union"), in its individual capacity, THE BANK OF NEW YORK, a New York banking
corporation ("BNY"), CREDIT LYONNAIS, CAYMAN ISLANDS BRANCH, a
-----------------
("Credit Lyonnais"), DRESDNER BANK AG, LOS ANGELES AGENCY AND GRAND CAYMAN
BRANCH, a ("Dresdner"), THE FIRST NATIONAL BANK OF CHICAGO, a
-----------------
national banking association ("FNB Chicago"), GUARANTY FEDERAL BANK F.S.B., a
("Guaranty Federal"), HIBERNIA NATIONAL BANK, a national banking
- -------------
association ("Hibernia"), NATWEST BANK N.A., a national banking association
("NatWest"), and NATIONSBANK OF TEXAS, N.A., a national banking association
("NationsBank") (First Union in its individual capacity, BNY, Credit Lyonnais,
Dresdner, FNB Chicago, Guaranty Federal, Hibernia, NatWest and NationsBank, each
together with its permitted successors and assigns, a "Lender" and,
collectively, the "Lenders"), and First Union as administrative agent for the
Lenders (in such capacity, the "Administrative Agent").
STATEMENT OF PURPOSE
--------------------
WHEREAS, each of the parties hereto is a party to a Facility II Credit
Agreement dated as of May 30, 1995, as amended by a First Amendment to Facility
II Credit Agreement dated as of September 25, 1995 and by a Second Amendment to
Facility II Credit Agreement dated as of January 4, 1996 (as so amended, the
"Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement to provide
for the modification of various terms and covenants thereof; and
WHEREAS, SUBJECT TO AND UPON THE TERMS AND CONDITIONS HEREIN SET FORTH, THE
Lenders are willing to make available, and to continue to make available, to the
Companies the credit facilities provided for in the Credit Agreement, as amended
hereby;
NOW, THEREFORE, in consideration of the premises and agreements contained
herein, and for good and valuable consideration, the receipt and sufficiency of
which are acknowledged by the parties hereto, the parties hereto hereby agree as
follows:
1. All capitalized terms used herein and not otherwise defined shall have
the respective meanings provided to such terms in the Credit Agreement, as
amended hereby.
1
<PAGE>
2. Paragraph 1(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"1(a) Lending Limit. Subject to the conditions set forth herein, the
-------------
Lenders severally agree that they shall, from time to time up to and
including the Business Day immediately preceding the Maturity Date, advance
and readvance their respective Percentage Shares of loans (the "Tranche A
Loans" or a "Tranche A Loan") to the Companies in amounts not to exceed, in
the aggregate at any one time outstanding (determined after giving effect
to the other transactions contemplated by the Loan Request pursuant to
which the applicable Tranche A Loan was requested), the lesser of:
(1) The Aggregate Tranche A Credit Limit; and
(2) The Collateral Value of the Tranche A Borrowing Base minus the
aggregate dollar amount of Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche A Loans (and which are not being repaid
by any Tranche A Loan requested).
Provided, however, that notwithstanding anything contained herein to the
-------- -------
contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding, all Tranche C Loans outstanding, all Tranche D
Loans outstanding, all Tranche E Loans outstanding, all Tranche F Loans
outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time."
3. Paragraph 2(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"2(a) Lending Limit. Subject to the conditions set forth herein, the
-------------
Lenders severally agree that they shall, from time to time up to and
including the Business Day immediately preceding the Maturity Date, advance
and readvance their respective Percentage Shares of loans (the "Tranche B
Loans" or a "Tranche B Loan") to the Companies in amounts not to exceed, in
the aggregate at any one time outstanding (determined after giving effect
to the other transactions contemplated by the Loan Request pursuant to
which the applicable Tranche B Loan was requested), the lesser of:
(1) The Aggregate Tranche B Credit Limit; and
(2) The Collateral Value of the Tranche B Borrowing Base minus the
aggregate dollar amount of Swing Line Loans outstanding which have been
identified
2
<PAGE>
by the Companies in the applicable Loan Request as being scheduled for
repayment by Tranche B Loans (and which are not being repaid by any Tranche
B Loan requested).
Provided, however, that notwithstanding anything contained herein to the
-------- -------
contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding, all Tranche C Loans outstanding, all Tranche D
Loans outstanding, all Tranche E Loans outstanding, all Tranche F Loans
outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time."
4. Paragraph 3(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"3(a) Lending Limit. Subject to the conditions set forth herein,
the Lenders severally agree that they shall, from time to time up to and
including the Business Day immediately preceding the Maturity Date, advance
and readvance their respective Percentage Shares of loans (the "Tranche C
Loans" or a "Tranche C Loan") to the Companies in amounts not to exceed, in
the aggregate at any one time outstanding (determined after giving effect
to the other transactions contemplated by the Loan Request pursuant to
which the applicable Tranche C Loan was requested), the lesser of:
(1) The Aggregate Tranche C Credit Limit; and
(2) The Collateral Value of the Tranche C Borrowing Base minus the
aggregate dollar amount of Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche C Loans (and which are not being repaid
by any Tranche C Loan requested).
Provided, however, that notwithstanding anything contained herein to the
-------- -------
contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding, all Tranche C Loans outstanding, all Tranche D
Loans outstanding, all Tranche E Loans outstanding, all Tranche F Loans
outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time."
5. Paragraph 4(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"4(a) Lending Limit. Subject to the conditions set forth herein, the
Lenders severally agree that they shall, from time to time up to and
including the Business Day immediately preceding the Maturity Date,
3
<PAGE>
advance and readvance their respective Percentage Shares of loans (the
"Tranche D Loans" or a "Tranche D Loan") to the Companies in amounts not to
exceed, in the aggregate at any one time outstanding (determined after
giving effect to the other transactions contemplated by the Loan Request
pursuant to which the applicable Tranche D Loan was requested), the lesser
of:
(1) The Aggregate Tranche D Credit Limit; and
(2) The Collateral Value of the Tranche D Borrowing Base minus the
aggregate dollar amount of Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche D Loans (and which are not being repaid
by any Tranche D Loan requested).
Provided, however, that notwithstanding anything contained herein to the
-------- -------
contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding, all Tranche C Loans outstanding, all Tranche D
Loans outstanding, all Tranche E Loans outstanding, all Tranche F Loans
outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time."
6. Paragraph 5(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"5(a) Lending Limit. Subject to the conditions set forth herein,
the Lenders severally agree that they shall, from time to time up to and
including the Business Day immediately preceding the Maturity Date, advance
and readvance their respective Percentage Shares of loans (the "Tranche E
Loans" or a "Tranche E Loan") to the Companies in amounts not to exceed, in
the aggregate at any one time outstanding (determined after giving effect
to the other transactions contemplated by the Loan Request pursuant to
which the applicable Tranche E Loan was requested), the lesser of:
(1) The Aggregate Tranche E Credit Limit; and
(2) The Collateral Value of the Tranche E Borrowing Base minus the
aggregate dollar amount of Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche E Loans (and which are not being repaid
by any Tranche E Loan requested).
Provided, however, that notwithstanding anything contained herein to the
-------- -------
contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding, all Tranche C Loans outstanding, all
4
<PAGE>
Tranche D Loans outstanding, all Tranche E Loans outstanding, all Tranche F
Loans outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time."
7. Paragraph 6(a) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"6(a) Lending Limit. Subject to the conditions set forth herein, the
-------------
Lenders severally agree that they shall, from time to time up to and
including the Business Day immediately preceding the Maturity Date, advance
and readvance their respective Percentage Shares of loans (the "Tranche F
Loans" or a "Tranche F Loan") to the Companies in amounts not to exceed, in
the aggregate at any one time outstanding (determined after giving effect
to the other transactions contemplated by the Loan Request pursuant to
which the applicable Tranche F Loan was requested), the lesser of:
(1) The Aggregate Tranche F Credit Limit; and
(2) The Collateral Value of the Tranche F Borrowing Base minus the
aggregate dollar amount of Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche F Loans (and which are not being repaid
by any Tranche F Loan requested).
Provided, however, that notwithstanding anything contained herein to the
-------- -------
contrary, at no time may the sum of all Tranche A Loans outstanding, all
Tranche B Loans outstanding, all Tranche C Loans outstanding, all Tranche D
Loans outstanding, all Tranche E Loans outstanding, all Tranche F Loans
outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time."
8. The following provisions are hereby added as a new Paragraph 6A of the
Credit Agreement:
"6A. Swing Line Facility.
--------------------
6A(a) Swing Line Lending Limit. Subject to the conditions set forth
herein, First Union agrees that it shall, from time to time up to and including
the Business Day immediately preceding the Maturity Date, advance and readvance
loans (the "Swing Line Loans" or a "Swing Line Loan") to the Companies in
amounts not to exceed, in the aggregate at any one time outstanding, the lesser
of:
(1) The Maximum Swing Line Commitment; and
5
<PAGE>
(2) (i) The sum of (A) the Collateral Value of the Tranche A
Borrowing Base, (B) the Collateral Value of the Tranche B Borrowing Base,
(C) the Collateral Value of the Tranche C Borrowing Base, (D) the
Collateral Value of the Tranche D Borrowing Base, (E) the Collateral Value
of the Tranche E Borrowing Base, and (F) the Collateral Value of the
Tranche F Borrowing Base, minus (ii) the aggregate dollar amount of Regular
-----
Loans outstanding;
Provided, however, that:
- -------- -------
i. In calculating the availability of Swing Line Loans under this
Paragraph 6A(a) at any date, the aggregate amount of Swing Line Loans
outstanding shall not include any Swing Line Loans which will be repaid
with Regular Loans to be advanced on such date in accordance with the terms
of this Agreement;
ii. Notwithstanding anything contained herein to the contrary, at
no time may the sum of all Tranche A Loans outstanding, all Tranche B Loans
outstanding, all Tranche C Loans outstanding, all Tranche D Loans
outstanding, all Tranche E Loans outstanding, all Tranche F Loans
outstanding and all Swing Line Loans outstanding exceed the Aggregate
Facility Commitment at such time; and
iii. Notwithstanding anything contained herein to the contrary, at no
time may (A) the sum of all Swing Line Loans outstanding which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche A Loans, plus all Tranche A Loans
outstanding, exceed the lesser of the Collateral Value of the Tranche A
Borrowing Base or the Aggregate Tranche A Credit Limit; (B) the sum of all
Swing Line Loans outstanding which have been identified by the Companies in
the applicable Loan Request as being scheduled for repayment by Tranche B
Loans, plus all Tranche B Loans outstanding, exceed the lesser of the
Collateral Value of the Tranche B Borrowing Base or the Aggregate Tranche B
Credit Limit; (C) the sum of all Swing Line Loans outstanding which have
been identified by the Companies in the applicable Loan Request as being
scheduled for repayment by Tranche C Loans, plus all Tranche C Loans
outstanding, exceed the lesser of the Collateral Value of the Tranche C
Borrowing Base or the Aggregate Tranche C Credit Limit; (D) the sum of all
Swing Line Loans outstanding which have been identified by the Companies in
the applicable Loan Request as being scheduled for repayment by Tranche D
Loans, plus all Tranche D Loans outstanding, exceed the lesser of the
Collateral Value of the Tranche D Borrowing Base or the Aggregate Tranche D
Credit Limit; (E) the sum of all Swing Line Loans outstanding which have
been identified by the Companies in the applicable Loan Request as being
6
<PAGE>
scheduled for repayment by Tranche E Loans, plus all Tranche E Loans
outstanding, exceed the lesser of the Collateral Value of the Tranche E
Borrowing Base or the Aggregate Tranche E Credit Limit; or (F) the sum of
all Swing Line Loans outstanding which have been identified by the
Companies in the applicable Loan Request as being scheduled for repayment
by Tranche F Loans, plus all Tranche F Loans outstanding, exceed the lesser
of the Collateral Value of the Tranche F Borrowing Base or the Aggregate
Tranche F Credit Limit.
6A(b) Interest Rate. Each Swing Line Loan shall bear interest at the
-------------
Applicable Corporate Rate which corresponds to the type of Regular Loan
identified by the Companies in the applicable Loan Request as being scheduled to
repay such Swing Line Loan.
6A(c) Payment of Interest. The Companies shall pay to the
-------------------
Administrative Agent for distribution to First Union interest on Swing Line
Loans outstanding hereunder from the date disbursed to but not including the day
of payment or refunding pursuant to Paragraph 6A(d) below. Interest on Swing
Line Loans shall be payable monthly, in arrears, as provided in Paragraph 7(l)
below.
6A(d) Refunding of Swing Line Loans. Upon demand by First Union,
-----------------------------
Swing Line Loans shall be refunded or participations therein acquired, as
applicable, in accordance with the following provisions. Such refunding or
acquisition will occur no later than 4:00 p.m. (Charlotte, North Carolina time)
on the day of such demand if made before 2:00 p.m. (Charlotte, North Carolina
time) and no later than 12:00 noon (Charlotte, North Carolina time) on the next
succeeding Business Day if demand therefor is made after 2:00 p.m. (Charlotte,
North Carolina time).
(1) Prior to the occurrence of an Event of Default or Potential
Default, Swing Line Loans shall be refunded by the Lenders. Such refundings
shall be made by the Lenders in accordance with their respective Percentage
Shares and shall, thereafter, be reflected as actual Regular Loans of the
Lenders on the books and records of the Administrative Agent. The type of
Regular Loan made by the Lenders in connection with the refunding of any
Swing Line Loan shall be the type of Loan identified by the Companies in
the Loan Request for such Swing Line Loan as being scheduled to repay such
Swing Line Loan.
(2) After the occurrence of any Event of Default or Potential
Default, each Lender (other than First Union) shall irrevocably and
unconditionally purchase from First Union, without recourse or warranty
(except that such outstanding Swing Line Loans in fact were made in
accordance with the provisions of this Agreement, and are not subject to
any Liens arising out of any act of First Union), an undivided interest and
participation in any Swing Line Loans then outstanding, by paying to First
Union, in dollars immediately available to First Union, an amount equal to
such Lender's
7
<PAGE>
Percentage Share of such Swing Line Loans, and thereafter, except as
otherwise provided in the second succeeding sentence, the Lenders'
respective interests in such Swing Line Loans, and the remaining interest
of First Union in such Swing Line Loans, shall in all respects be treated
as Regular Loans under this Agreement of the type identified by the
Companies in the Loan Request for such Swing Line Loan as being scheduled
to repay such Swing Line Loan, but such Swing Line Loans shall continue to
be evidenced by the Note which evidences the Swing Line Loans. If any
Lender does not pay any amount which it is required to pay to First Union,
First Union shall be entitled to recover such amount on demand from such
Lender, together with interest thereon, at the Applicable Corporate Rate,
for each day from the date of such demand, if made prior to 2:00 p.m.
(Charlotte, North Carolina time) on any Business Day, or, if made after
2:00 p.m. from the next Business Day following the date of such demand,
until the date such amount is paid to First Union by such Lender. If such
Lender does not pay such amount forthwith upon First Union's demand
therefor, and until such time as such Lender makes the required payment,
First Union shall be deemed to continue to have outstanding a Swing Line
Loan in the amount of such unpaid participation obligation for all purposes
of this Agreement other than those provisions requiring such other Lender
to purchase a participation therein. First Union shall upon the request of
such Lender, furnish to such Lender a participation certificate evidencing
the participation purchased by such Lender.
(3) [Intentionally Omitted].
(4) Notwithstanding anything contained in this Agreement to the
contrary, no Lender shall be obligated to refund or acquire a participation
interest in any Swing Line Loans made by First Union unless (i) First Union
believed in good faith that all conditions specified in Paragraph 6A(a)
above and Paragraph 9 below to the making of such Swing Line Loans were
satisfied at the time such Swing Line Loans were made, or (ii) such Lender
had actual knowledge that any such condition had not been satisfied and
failed to notify First Union in writing prior to the time First Union made
such Swing Line Loan that First Union was not authorized to make a Swing
Line Loan until such condition had been satisfied, or (iii) the
satisfaction of any such condition that was not satisfied had been waived
by the requisite Lenders in accordance with the provisions of this
Agreement, or the making of such Swing Line Loan in the face of such non-
satisfied condition or conditions had been consented to by the requisite
Lenders in accordance with the provisions of this Agreement."
9. Paragraph 7(j)(1) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
8
<PAGE>
"(1)(a) If the Companies desire to borrow a Swing Line Loan
hereunder, the Companies shall make a Loan Request to the
Administrative Agent no later than 4:45 p.m. (Charlotte, North
Carolina time) on the proposed funding date, which Loan Request
shall identify the type of Regular Loan which is scheduled to
repay such Swing Line Loan. First Union shall make available the
amount of the proposed Swing Line Loan by crediting the amount
thereof in immediately available same day funds to the Funding
Account on such date.
(b) If the Companies desire to borrow a Corporate Rate
Loan (other than a Swing Line Loan) hereunder, the Companies
shall make a Loan Request to the Administrative Agent no later
than 2:00 p.m. (Charlotte, North Carolina time) on the proposed
funding date, which Loan Request shall be forwarded promptly by
the Administrative Agent to the Lenders by facsimile transmission
no later than 2:45 p.m. (Charlotte, North Carolina time) on such
date. The applicable Lenders shall make available the amount of
their respective Percentage Shares of the proposed Corporate Rate
Loan by crediting the amount thereof in immediately available
same day funds to the Funding Account no later than 3:30 p.m.
(Charlotte, North Carolina time) on such date."
10. Paragraph 7(j)(3) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"(3) Each Corporate Rate Loan (other than a Swing Line Loan) and each
Eurodollar Loan shall be allocated among and funded by the Lenders in
accordance with their applicable Percentage Shares. The failure of any
Lender to make its Percentage Share of any Regular Loan to be made by it as
part of any borrowing shall not relieve any other Lender of its obligation
hereunder to advance its applicable portion of the principal amount thereof
but no Lender shall be responsible for the failure of any other Lender to
make the advance required of it."
11. Paragraph 7(k) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"7(k) Notes. The joint and several obligations of the Companies to
-----
repay the Loans shall be evidenced by (i) notes payable to the order of
each Lender, as applicable, in the form set forth as Exhibit A-2 in the
-----------
Addendum, and (ii) a Facility II Swing Line Promissory Note payable to the
order of First Union, in form
9
<PAGE>
and content acceptable to First Union (collectively the "Notes")."
12. Paragraph 7(n) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"7(n) Borrowing Base Conformity; Mandatory Prepayments.
-------------------------------------------------
(1) The Companies shall cause to be maintained with the
Collateral Agent a Tranche A Borrowing Base such that the Collateral
Value of the Tranche A Borrowing Base is not less than, at any date,
the sum of the aggregate dollar amount of outstanding Tranche A Loans
plus the aggregate dollar amount of outstanding Swing Line Loans which
have been identified by the Companies in the applicable Loan Request
as being scheduled for repayment by Tranche A Loans.
(2) The Companies shall cause to be maintained with the
Collateral Agent a Tranche B Borrowing Base such that the Collateral
Value of the Tranche B Borrowing Base is not less than, at any date,
the sum of the aggregate dollar amount of outstanding Tranche B Loans
plus the aggregate dollar amount of outstanding Swing Line Loans which
have been identified by the Companies in the applicable Loan Request
as being scheduled for repayment by Tranche B Loans.
(3) The Companies shall cause to be maintained with the
Administrative Agent a Tranche C Borrowing Base such that the
Collateral Value of the Tranche C Borrowing Base is not less than, at
any date, the sum of the aggregate dollar amount of outstanding
Tranche C Loans plus the aggregate dollar amount of outstanding Swing
Line Loans which have been identified by the Companies in the
applicable Loan Request as being scheduled for repayment by Tranche C
Loans.
(4) The Companies shall cause to be maintained with the
Collateral Agent a Tranche D Borrowing Base such that the Collateral
Value of the Tranche D Borrowing Base is not less than, at any date,
the sum of the aggregate dollar amount of outstanding Tranche D Loans
plus the aggregate dollar amount of outstanding Swing Line Loans which
have been identified by the Companies in the applicable Loan Request
as being scheduled for repayment by Tranche D Loans.
(5) The Companies shall cause to be maintained with the
Collateral Agent a Tranche E Borrowing Base such that the Collateral
Value of the Tranche E Borrowing Base is not less than, at any date,
the sum of the aggregate dollar amount of outstanding
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<PAGE>
Tranche E Loans plus the aggregate dollar amount of outstanding
Swing Line Loans which have been identified by the Companies in the
applicable Loan Request as being scheduled for repayment by Tranche E
Loans.
(6) The Companies shall cause to be maintained with the
Collateral Agent a Tranche F Borrowing Base such that the Collateral
Value of the Tranche F Borrowing Base is not less than, at any date,
the sum of the aggregate dollar amount of outstanding Tranche F Loans
plus the aggregate dollar amount of outstanding Swing Line Loans which
have been identified by the Companies in the applicable Loan Request
as being scheduled for repayment by Tranche F Loans.
(7) The Companies shall prepay Loans to the Administrative
Agent on behalf of the Lenders, upon telephonic or facsimile demand by
the Administrative Agent, on any day (A) in the amount by which the
aggregate principal amount of outstanding Tranche A Loans, plus the
aggregate principal amount of outstanding Swing Line Loans which have
been identified by the Companies in the applicable Loan Request as
being scheduled for repayment by Tranche A Loans, exceeds the
Collateral Value of the Tranche A Borrowing Base, (B) in the amount by
which the aggregate principal amount of outstanding Tranche B Loans,
plus the aggregate principal amount of outstanding Swing Line Loans
which have been identified by the Companies in the applicable Loan
Request as being scheduled for repayment by Tranche B Loans, exceeds
the Collateral Value of the Tranche B Borrowing Base, (C) in the
amount by which the aggregate principal amount of outstanding Tranche
C Loans, plus the aggregate principal amount of outstanding Swing Line
Loans which have been identified by the Companies in the applicable
Loan Request as being scheduled for repayment by Tranche C Loans,
exceeds the Collateral Value of the Tranche C Borrowing Base, (D) in
the amount by which the aggregate principal amount of outstanding
Tranche D Loans, plus the aggregate principal amount of outstanding
Swing Line Loans which have been identified by the Companies in the
applicable Loan Request as being scheduled for repayment by Tranche D
Loans, exceeds the Collateral Value of the Tranche D Borrowing Base,
(E) in the amount by which the aggregate principal amount of
outstanding Tranche E Loans, plus the aggregate principal amount of
outstanding Swing Line Loans which have been identified by the
Companies in the applicable Loan Request as being scheduled for
repayment by Tranche E Loans, exceeds the Collateral Value of the
Tranche E Borrowing Base, (F) in the amount by which the aggregate
principal amount of outstanding Tranche F Loans, plus the aggregate
principal amount of outstanding Swing Line Loans which have been
identified by the Companies in the applicable Loan Request as being
scheduled for repayment
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<PAGE>
by Tranche F Loans, exceeds the Collateral Value of the Tranche F
Borrowing Base, or (G) in the amount by which the sum of the aggregate
principal amount of outstanding Tranche A Loans, Tranche B Loans,
Tranche C Loans, Tranche D Loans, Tranche E Loans, Tranche F Loans and
Swing Line Loans exceeds the Aggregate Facility Commitment; said
prepayment to be made on the date on which demand is made by the
Administrative Agent if made prior to 12:00 p.m. (Charlotte, North
Carolina time) or, if made later than 12:00 p.m. (Charlotte, North
Carolina time), before 12:00 p.m. (Charlotte, North Carolina time) on
the next Business Day.
(8) If at such time as the Companies shall be required to
prepay Loans under this Paragraph 7(n) there shall not have occurred
and be continuing an Event of Default, in lieu of prepaying the Loans
as required, the Companies may deliver to the Collateral Agent or the
Administrative Agent, as applicable, additional Collateral such that
after giving effect to the inclusion of such Collateral in the
respective borrowing bases, the Companies shall be in compliance with
the requirements of subparagraphs (1) through (6) above."
13. Paragraph 7(o) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"7(o) Nature and Place of Payments. All payments made on account of
----------------------------
the Obligations shall be made to the Administrative Agent for distribution
to the Lenders, and the Administrative Agent is hereby irrevocably
authorized to debit the Settlement Account and distribute amounts held
therein as provided in Paragraph 7(s) below on account thereof. All
payments made on account of the Obligations shall be made without setoff or
counterclaim in lawful money of the United States of America in immediately
available same day funds, free and clear of and without deduction for any
taxes, fees or other charges of any nature whatsoever imposed by any taxing
authority. If such payments (other than principal payments made via wire
transfers under the Federal Reserve System on Swing Line Loans held solely
by First Union, i.e., the other Lenders have not purchased participations
therein pursuant to Paragraph 6A(d)(2) above) are received by the
Administrative Agent by 3:30 p.m. on any Business Day (Charlotte, North
Carolina time) such payment will be credited on such Business Day. If a
payment (other than principal payments made via wire transfers under the
Federal Reserve System on Swing Line Loans held solely by First Union) is
received after 3:30 p.m. (Charlotte, North Carolina time) by the
Administrative Agent, such payment will be credited on the next succeeding
Business Day and interest thereon shall be payable at the then applicable
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<PAGE>
rate until credited, provided, that the Administrative Agent shall use its
--------
best efforts to credit such payment on the Business Day received. Principal
payments via wire transfers under the Federal Reserve System on Swing Line
Loans held solely by First Union will be credited as of the Business Day on
which First Union receives credit for such funds in its account with the
Federal Reserve Bank. All amounts received by the Administrative Agent on
account of the Obligations shall be disbursed by the Administrative Agent
to the applicable Lenders by wire transfer on the date of receipt if
received by the Administrative Agent by the applicable deadline for payment
thereof as specified above, or if received later, on the next succeeding
Business Day. If any payment required to be made by the Companies hereunder
becomes due and payable on a day other than a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and interest
thereon shall be payable at the then applicable rate during such
extension."
14. Paragraph 7(s) of the Credit Agreement is hereby deleted in its
entirety and the following paragraph is hereby substituted in lieu thereof:
"7(s) Allocation of Payments Received.
-------------------------------
(1) Prior to the occurrence of an Event of Default and
acceleration of all Loans outstanding hereunder or termination of the
commitments of the Lenders to advance Loans hereunder, principal amounts
received by the Administrative Agent with respect to Loans shall be
allocated (i) first, to First Union in payment of any Swing Line Loans
-----
which have not been refunded with Regular Loans, then (ii) next, among the
----
Lenders on account of the Obligations pro rata in accordance with their
respective Percentage Shares.
(2) Following the occurrence of an Event of Default and
acceleration of all Loans outstanding hereunder or termination of the
commitments of the Lenders to advance Loans hereunder, all amounts received
by the Administrative Agent on account of the Obligations shall be
disbursed by the Administrative Agent as follows:
(i) First, to the payment of reasonable costs and expenses
incurred by the Administrative Agent and Collateral Agent in the
performance of their duties and enforcement of their rights under the
Credit Documents, including, without limitation, all reasonable costs
and expenses of collection, reasonable attorneys' fees, court costs and
foreclosure expenses;
(ii) Second, to First Union in payment of any Swing Line
Loans outstanding (A) in which
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<PAGE>
the Lenders are obligated to purchase participations pursuant to the
terms and provisions of Paragraph 6(A)(d)(2) above, (B) which have not
been refunded with Regular Loans, and (C) in which participations have
not been purchased by the Lenders pursuant to the terms and provisions
of Paragraph 6A(d)(2) above;
(iii) Third, to the Lenders, pro rata in accordance with
their respective Repayment Shares, until the outstanding Loans and
other Obligations shall have been paid in full, provided that all such
--------
amounts described herein shall be applied first to interest and then
to principal, as applicable, provided further that for the sole
-------- -------
purpose of this Paragraph 7(s)(2)(iii), the Lenders' respective
Repayment Shares shall be adjusted to take into account interest which
may be owing to any Lender at a rate determined pursuant to the
provisions of Paragraph 7(u) below, and provided further that for the
-------- -------
sole purpose of this Paragraph 7(s)(2)(iii), First Union's Repayment
Share shall be adjusted to exclude Swing Line Loans outstanding which,
by application of Paragraph 6A(d)(4) above, the Lenders are not
obligated to refund;
(iv) Fourth, to First Union in payment of any Swing Line
Loans outstanding which, by application of Paragraph 6A(d)(4) above,
the Lenders are not obligated to refund; and
(v) Fifth, to such Persons as may be legally entitled
thereto."
15. Paragraph 12(g) of the Credit Agreement is hereby amended by deleting
the ratio "XX.X:1.0" contained therein and substituting the ratio "XX.X:1.0" in
lieu thereof.
16. Paragraph 13 of the Credit Agreement is hereby amended by adding the
following sentence to the end of the last paragraph thereof:
"Provided, however, that no Lender will be required to purchase a
-------- -------
participation in a Swing Line Loan which, by application of Paragraph
6A(d)(4) above, it would not have been obligated to refund."
17. The definition of the term "Aggregate Facility Commitment" contained
in Paragraph 16 of the Credit Agreement is hereby deleted in its entirety and
the following definition is hereby substituted in lieu thereof:
"'Aggregate Facility Commitment' shall mean, at any time, the sum of the
-----------------------------
Lenders' Maximum Commitments at such time; provided that such sum shall not
-------- ----
exceed $XXX,XXX,XXX at any time."
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<PAGE>
18. The definition of the term "Aggregate Tranche D Credit Limit"
contained in Paragraph 16 of the Credit Agreement is hereby amended by deleting
the phrase "XXXXX-XXXX percent (XX%)" contained therein and substituting the
phrase "XXXXXXX-XXXX percent (XX%)" in lieu thereof.
19. The definitions of the terms "Corporate Rate Loan" and "Corporate Rate
Loans" contained in Paragraph 16 of the Credit agreement are hereby deleted in
their entireties and the following definitions are hereby substituted in lieu
thereof:
"'Corporate Rate Loan' shall mean a Tranche A Corporate Rate Loan, a
-------------------
Tranche B Corporate Rate Loan, a Tranche C Corporate Rate Loan, a Tranche D
Corporate Rate Loan, a Tranche E Corporate Rate Loan, a Tranche F Corporate
Rate Loan or a Swing Line Loan, as applicable."
"'Corporate Rate Loans' shall mean, collectively, Tranche A Corporate Rate
--------------------
Loans, Tranche B Corporate Rate Loans, Tranche C Corporate Rate Loans,
Tranche D Corporate Rate Loans, Tranche E Corporate Rate Loans, Tranche F
Corporate Rate Loans and Swing Line Loans."
20. The definition of the term "Eurodollar Rate" contained in Paragraph 16
of the Credit Agreement is hereby deleted in its entirety and the following
definition is hereby substituted in lieu thereof:
"'Eurodollar Rate' shall mean, with respect to any Eurodollar Loan for the
---------------
Interest Period applicable to such Eurodollar Loan, the arithmetic average
of the rates at which deposits in immediately available U.S. dollars in an
amount equal to the aggregate amount of Eurodollar Loans proposed to be
subject to such rates having a maturity approximately equal to such
Interest Period are offered to or by reference banks in the London
interbank market, as determined by the Administrative Agent by reference to
page 3750 or 4833, as applicable, of the Telerate Systems Incorporated
screen service as of 11:00 a.m. (London time) two Eurodollar Business Days
prior to the first day of such Interest Period."
21. The definitions of the terms "Loan" and "Loans" contained in Paragraph
16 of the Credit Agreement are hereby deleted in their entireties and the
following definitions are hereby substituted in lieu thereof:
"'Loan' shall mean a Tranche A Loan, a Tranche B Loan, a Tranche C Loan, a
----
Tranche D Loan, a Tranche E Loan, a Tranche F Loan, or a Swing Line Loan,
as applicable."
"'Loans' shall mean, collectively, Tranche A Loans, Tranche B Loans,
-----
Tranche C Loans, Tranche D Loans, Tranche E Loans, Tranche F Loans and
Swing Line Loans."
15
<PAGE>
22. The following definitions of the terms "Maximum Swing Line
Commitment", "Regular Loan", "Regular Loans", "Swing Line Loan" and "Swing Line
Loans" are hereby added to Paragraph 16 in correct alphabetical order as
follows:
"'Maximum Swing Line Commitment' shall mean with respect to First Union the
-----------------------------
lesser of (i) the excess of its Maximum Commitment over its Percentage
Share of all Regular Loans outstanding, or (ii) $XX,XXX,XXX."
"'Regular Loan' shall mean a Tranche A Loan, a Tranche B Loan, a Tranche C
------------
Loan, a Tranche D Loan, a Tranche E Loan or a Tranche F Loan, as
applicable."
"'Regular Loans' shall mean, collectively, Tranche A Loans, Tranche B
-------------
Loans, Tranche C Loans, Tranche D Loans, Tranche E Loans and Tranche F
Loans."
"'Swing Line Loan' and 'Swing Line Loans' shall have the meanings given
--------------- ----------------
such terms in Paragraph 6A(a) above."
23. The Commitment Schedule (Facility II Credit Agreement) contained as
Schedule I-2 to the Addendum is hereby deleted and the Commitment Schedule
(Facility II Credit Agreement) attached as EXHIBIT A to this Amendment is
substituted therefor.
24. This Amendment shall become effective as of the date hereof, provided
that the Administrative Agent shall have received by such date the following
items:
(A) A copy of this Amendment executed by each of the Companies, each of the
Lenders, and the Administrative Agent (whether such parties shall have
signed the same or different copies);
(B) A Facility II Swing Line Promissory Note of even date herewith, as duly
executed by the Companies, such note to be payable by the Companies to the
order of First Union and to be in the form of ANNEX I HERETO; AND
(C) Certificates of even date herewith signed by the President or any Vice
President of each of CWM, INMC and ILC, and attested to by the Secretary or
any Assistant Secretary of each of CWM, INMC and ILC, certifying that (i)
the Articles, Bylaws and resolutions of each such party previously
delivered to the Administrative Agent remain in full force and effect
except as provided therein, (ii) such party remains in good standing, (iii)
all representations and warranties of such party previously made to the
Lenders remain true, complete and accurate, and (iv) no Event of Default or
Potential Default has occurred and is continuing.
16
<PAGE>
25. This Amendment is limited and, except as set forth herein, shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement, or any other document or instrument entered into in connection
therewith.
26. This Amendment may be executed in any number of counterparts by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which together
shall constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Companies and the Administrative Agent.
27. This Amendment and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the State of
North Carolina.
28. From and after the date hereof, all references in the Credit
Agreement, and any other document or instrument entered into in connection
therewith, to the Credit Agreement shall be deemed to be references to the
Credit Agreement as amended hereby.
29. THE LENDERS, THE ADMINISTRATIVE AGENT, AND THE COMPANIES EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED
BY LAW, THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AMENDMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS AND THE ADMINISTRATIVE
AGENT TO ENTER INTO THIS AMENDMENT.
17
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment to be duly executed and delivered as of the date first above
written.
CWM MORTGAGE HOLDINGS, INC.
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: Executive Vice President &
Chief Operating Officer
INDEPENDENT NATIONAL MORTGAGE CORPORATION
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: President & Chief Executive
Officer
INDEPENDENT LENDING CORPORATION
By: /s/ Michael W. Perry
Name: Michael W. Perry
Title: President & Chief Executive
Officer
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA,
as Administrative Agent and as a Lender
By: /s/ Carolyn Eskridge
Name: Carolyn Eskridge
Title: SVP
THE BANK OF NEW YORK
By: /s/ Cynthia E. Crites
Name: Cynthia E. Crites
Title: AVP
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<PAGE>
CREDIT LYONNAIS, CAYMAN ISLANDS BRANCH
By: /s/ William J. Fischer
Name: William J. Fischer
Title: Authorized Signatory
DRESDNER BANK AG, LOS ANGELES AGENCY AND GRAND CAYMAN
BRANCH
By: /s/ Sidney S. Jordan
Name: Sidney S. Jordan
Title: Vice President
By: /s/ Vitol Wiacek
Name: Vitol Wiacek
Title: Asst. Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Ann H. Chudacoff
Name: Ann H. Chudacoff
Title: Vice President
GUARANTY FEDERAL BANK F.S.B.
By: /s/ Abbie Y. Tidmore
Name: Abbie Y. Tidmore
Title: Vice President
HIBERNIA NATIONAL BANK
By: /s/ Edward K. Santos
Name: Edward K. Santos
Title: Vice President
19
<PAGE>
NATWEST BANK N.A.
By: /s/ Robert L. Klein
Name: Robert L. Klein
Title: Assistant Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Mary Pat Riggins
Name: Mary Pat Riggins
Title: Vice President
20
<PAGE>
EXHIBIT 10.8
EXECUTION COPY
MASTER FORWARD COMMITMENT AND SERVICES AGREEMENT
This Master Forward Commitment and Services Agreement (the
"Agreement") is entered into and effective as of January 1, 1996, by and between
CWM Mortgage Holdings, Inc. ("CWM") and Independent National Mortgage
Corporation ("INMC").
WITNESSETH:
WHEREAS, CWM and INMC desire to set forth the terms and conditions
under which CWM will commit to sell and assign Assets to INMC, and INMC will
commit to purchase and assume from CWM all of CWM's rights and obligations with
respect to such Assets; and
WHEREAS, CWM and INMC desire to set forth their agreement with respect
to certain other assets which CWM may purchase and hold in its portfolio, but
which are not intended to be, and are not, sold or assigned to INMC pursuant to
the terms of this Agreement; and
WHEREAS, CWM and INMC desire to set forth the terms and conditions
under which INMC will provide to CWM certain services relating to such Assets
and other assets.
NOW, THEREFORE, in consideration of the agreements herein contained,
CWM and INMC agree as follows:
Section 1. Definitions. Each term defined in this Section, when
-----------
used in this Agreement, shall, unless the context otherwise requires, have the
following meaning:
"Adjusted Net Equity" means the purchase price paid by CWM for an
Asset (as determined pursuant to Section 4(a) hereof), less the sum of (i) any
principal amortization of such Asset and (ii) the maximum amount of any
borrowings permitted under any Reverse Repurchase Agreement or any other debt
obligation with respect to such Asset, excluding any interest attributable to
and accruing on such Reverse Repurchase Agreement or other debt obligation prior
to the related Settlement Date.
"Asset" means any Mortgage Loan, Subprime Mortgage Loan or
Manufactured Housing Loan.
"Best Efforts Rate Lock" means, with respect to an Asset, a Rate Lock
requiring delivery of such Asset, but only if such Asset is actually originated
by the related Seller/Servicer.
<PAGE>
"Best Efforts Rate Lock Fee" means a fee, if any, paid by a
Seller/Servicer with respect to a Best Efforts Rate Lock.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" means, in the case of any Asset acquired by CWM from a
Seller/Servicer pursuant to a Rate Lock, other than any Asset identified to INMC
by CWM as being an Other Asset, the related commitment made by INMC to acquire
such Asset from CWM. The price for any such Commitment shall be equal to the
related Rate Lock taken, which is based generally on the daily price sheet or
the related Seller/Servicer's master commitment.
"Commitment Pair-Off Fee" means a fee paid by CWM for a shortfall in
the delivery of Assets pursuant to Sections 5(b) or 10 hereof, in an amount
equal to the sum of (a) 0.125% and (b) "market movement" (as such term is
defined in the Seller/Servicer Guide), of the excess of (i) the aggregate
outstanding principal balance of the related Assets as of the date such
Commitment Pair-Off Fee becomes due and payable over (ii) 5% of the aggregate
principal amount of all Commitments funded by CWM during the related fiscal
quarter, or such other amount as may be agreed upon by CWM and INMC from time to
time.
"Commitment Term" means, with respect to any Commitment, the period
commencing on the date on which such Commitment becomes effective and ending (a)
in the case of a Commitment relating to a Mortgage Loan, on the 180th day or (b)
in the case of a Commitment relating to a Subprime Mortgage Loan or a
Manufactured Housing Loan, on the 360th day, in each case after the date on
which CWM has funded the Asset that is the subject of the Commitment, or such
later day as may be mutually agreed upon by CWM and INMC.
"Early Settlement Days" means, with respect to any calendar year, a
fraction (expressed as a number of days) the numerator of which is equal to the
sum of the products of (a) the outstanding principal balance of each Asset
acquired by INMC from CWM during such calendar year, as of the date such Asset
is transferred to INMC, and (b) the number of days such Asset was owned by CWM,
and the denominator of which is equal to the aggregate outstanding principal
balance of all Assets acquired by INMC from CWM during such calendar year, as of
the date such Assets were transferred to INMC, as applicable. Notwithstanding
the foregoing, Assets determined to be ineligible pursuant to Section 7(c)
hereof or unmarketable pursuant to Section 7(d) hereof shall, on the date such
determination is made, be treated
2
<PAGE>
as being held by CWM (a) in the case of a Mortgage Loan, for 180 days (or such
longer period as may be mutually agreed upon by CWM and INMC), or (b) in the
case of a Subprime Mortgage Loan or a Manufactured Housing Loan, for 360 days
(or such longer period as may be mutually agreed upon by CWM and INMC), and in
each case shall be included in the Assets acquired by INMC from CWM during the
related calendar year for purposes of this definition.
"Early Settlement Factor" means, with respect to any calendar year,
the greater of (a) 60 days minus the Early Settlement Days for such calendar
year and (b) zero.
"Early Settlement Fee" means, with respect to any calendar year, an
amount equal to a fraction, the numerator of which is equal to the product of
(a) the aggregate principal balance of each Asset transferred to INMC during
such calendar year, as of the date such Asset is transferred to INMC, (b) the
Net Spread and (c) the Early Settlement Factor, and the denominator of which is
equal to 365 days. (An example of how to calculate the Early Settlement Fee is
set forth in Exhibit A hereto.)
"Eligible Asset" means an Asset that meets the General Loan
Eligibility criteria set forth in the Seller/Servicer Guide.
"Expenses" means all expenses associated with the acquisition of an
Asset, including, without limitation, costs associated with production,
marketing, rate locks, underwriting, funding, document control, file control and
quality control.
"FNMA" means the Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
"INFC" means Independent National Finance Corporation, a division of
INMC.
"INHS" means Independent National Housing Services, a division of
INMC.
"Law" means any constitutional provision, statute or other law, rule,
regulation or interpretation of any government or any agency, bureau, board,
commission, court, department official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state or local, domestic or
foreign, or any decree, injunction, judgment, order, ruling, assessment or writ.
3
<PAGE>
"LIBOR" means, with respect to any date of determination, the rate of
interest per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%)
for overnight Dollar deposits on Bloomberg at or about 11:00 a.m. (London time)
on such date, or, if such service ceases to display such information, then such
other service as may replace it for the purpose of display of such information
(the "Bloomberg Rate"). If the Bloomberg Rate cannot be determined, then LIBOR
shall mean, with respect to such date, the arithmetic mean of the rates of
interest (rounded upwards, if necessary, to the nearest 1/100th of 1%) offered
to two prime banks in the London interbank market (selected by CWM) of overnight
Dollar deposits at or about 11:00 a.m. (London time) on such date. If on any
such date only one or none of such prime banks provides such offered quotations,
LIBOR for such date shall be such other rate as shall be mutually agreed upon by
CWM and INMC.
"Mandatory Rate Lock" means a Rate Lock requiring delivery of a
specified principal amount of Assets or payment of a Rate Lock Pair-Off Fee by
the related Seller/Servicer.
"Mandatory Rate Lock Fee" means a fee paid by a Seller/Servicer with
respect to a Mandatory Rate Lock.
"Manufactured Housing Loan" means any loan secured, in whole or in
part, by a "manufactured home" described in Section 25(e)(10) of the Code, (a)
that is originated pursuant to the provisions of the Seller/Servicer Guide, (b)
that is acquired by CWM pursuant to a Rate Lock made during the term of this
Agreement, and (c) that, at the time of acquisition, CWM intends to sell to INMC
hereunder.
"Mortgage Loan" means any mortgage loan (a) that is originated
pursuant to the provisions of the Seller/Servicer Guide relating to INMC
programs, (b) that is acquired by CWM pursuant to a Rate Lock made during the
term of this Agreement, and (c) that, at the time of acquisition, CWM intends to
sell to INMC hereunder.
"Net Spread" means a rate equal to the (a) sum of (i) the year-to-date
average yield on a 30-year, 30-day FNMA commitment at par and (ii) 1.5%, minus
(b) the sum of (i) year-to-date average overnight LIBOR and (ii) 0.40%, or such
other rate as may be mutually agreed upon by CWM and INMC.
"Optional Rate Lock" means a Rate Lock under which there exists a
right, but no obligation, to deliver a specified principal amount of Assets.
4
<PAGE>
"Optional Rate Lock Fee" means a fee paid by a Seller/Servicer with
respect to an Optional Rate Lock.
"Other Asset" means, any mortgage loan or loan secured, in whole or in
part, by a "manufactured home" described in Section 25(e)(10) of the Code, that
is (a) acquired by CWM pursuant to a Rate Lock, (b) not intended to be, and does
not become, the subject of any Commitment under this Agreement, and (c)
identified as such by CWM to INMC at the time the related Rate Lock is
established.
"Rate Lock" means any commitment made by CWM to acquire an Asset from
a Seller/Servicer on which an interest rate has been locked, irrespective of
whether such Asset is or becomes the subject of any Commitment.
"Rate Lock Fee" means any Mandatory Rate Lock Fee, Best Efforts Rate
Lock Fee or Optional Rate Lock Fee paid by the related Seller/Servicer in
connection with a Master Commitment or any similar agreement to deliver an
Asset.
"Rate Lock Pair-Off Fee" means a fee paid by a Seller/Servicer for a
shortfall in the delivery of Assets subject to a Mandatory Rate Lock.
"REMIC" means any real estate mortgage investment conduit as defined
in Section 860D(a) of the Code.
"Reverse Repurchase Agreement" means any reverse repurchase agreement
entered into and effective from time to time by and between CWM and a
counterparty-purchaser, irrespective of whether INMC is a party to such
agreement.
"Seller/Servicer" means a person or entity that has entered into a
sale and/or servicing agreement with INMC, INFC, INHS or CWM incorporating the
Seller/Servicer Guide.
"Seller/Servicer Guide" means the INMC Seller/Servicer Guide, the INFC
Seller Guide or the INHS Seller Guide, as applicable, in each case as amended
from time to time, and such other comparable guides as from time to time may be
established by INMC and approved by CWM. For purposes of this definition, the
"Seller/Servicer Guide" shall (a) incorporate any exceptions thereto agreed upon
by INMC, INFC, INHS or CWM, as applicable, and the related Seller/Servicer and
(b) include the terms of any master commitment between the related
Seller/Servicer and INMC, INFC, INHS or CWM, as applicable.
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<PAGE>
"Settlement Date" means, as to any Asset, the earliest of:
(i) the date on which such Asset is sold by INMC as part of a
whole loan sale;
(ii) the date on which such Asset is contributed to a REMIC or
other securitization vehicle by INMC; or
(iii) the last day of the applicable Commitment Term for such
Asset.
"Subprime Mortgage Loan" means any mortgage loan (a) that is
originated pursuant to the provisions of the Seller/Servicer Guide relating to
INFC programs, (b) that is acquired by CWM pursuant to a Rate Lock made during
the term of this Agreement, and (c) that, at the time of acquisition, CWM
intends to sell to INMC hereunder.
Section 2. CWM's Obligations under the Commitment.
--------------------------------------
(a) Subject to and upon compliance with the terms and conditions
of this Agreement (including, without limitation, payment by INMC of
any Early Settlement Fee pursuant to Section 4(c) hereof), CWM agrees
to sell and assign to INMC all of CWM's rights with respect to the
Assets (including, but not limited to (i) CWM's right to sell such
Assets or offer such Assets for sale and (ii) any and all rights CWM
may have to service or master service such Assets). Notwithstanding
the foregoing, subject to Section 5(b) hereof, CWM shall not sell any
Asset to INMC hereunder prior to the Settlement Date for such Asset.
(b) It is expressly understood that CWM may acquire Other Assets
for its portfolio; provided, however, in the event that CWM receives
an offer from any third party to purchase one or more Other Assets
acquired by CWM, CWM (i) shall promptly notify INMC of the terms and
conditions of such third party offer and (ii) hereby grants to INMC an
option to purchase any such Other Assets upon the same terms and
conditions as such third party offer, such option exercisable by INMC
at any time prior to the time such third party offer shall expire in
accordance with its terms. Notwithstanding the foregoing, except as
described in this Section 2(b), CWM shall be under no obligation to
sell Other Assets to INMC pursuant to the terms of this Agreement.
6
<PAGE>
Section 3. INMC's Rights and Obligations under the Commitment.
--------------------------------------------------
(a) Subject to and upon compliance with the terms and conditions
of this Agreement, INMC agrees to purchase and assume all of CWM's
rights and obligations with respect to the Assets (including, but not
limited to (i) CWM's right to sell such Assets or offer such Assets
for sale and (ii) any and all rights CWM may have to service or master
service such Assets). Notwithstanding the foregoing, subject to
Section 5(b) hereof, INMC shall not be required, nor shall it have any
right, to purchase any Asset hereunder prior to the Settlement Date
for such Asset.
(b) Notwithstanding any assignment and assumption of rights and
obligations contemplated by Sections 2(a) and 3(a) hereof, CWM shall
remain, and INMC (in its capacity as a party to such assignment and
assumption) shall become, individually liable under any Reverse
Repurchase Agreement or other debt obligation entered into by CWM with
respect to any Asset sold to INMC hereunder pursuant to the terms and
conditions of such agreement or obligation.
(c) It is expressly understood that, except as otherwise
provided in Section 2(b) hereof, INMC shall be under no obligation
pursuant to this Agreement to purchase any Other Assets which CWM may
acquire for its portfolio.
Section 4. Purchase Price and Other Related Fees.
-------------------------------------
(a) The purchase price to be paid by CWM for each Asset to be
acquired by it shall, absent a timely objection by CWM, be the price
that INMC has, pursuant to a Commitment, agreed to pay for such Asset.
The purchase price to be paid by INMC for each Asset to be acquired by
it pursuant to a Commitment shall consist of (i) a cash payment equal
to the Adjusted Net Equity of such Asset as of its related Settlement
Date (reduced by any amounts previously delivered to CWM in respect of
such Asset pursuant to Section 6 hereof) and (ii) notwithstanding
CWM's continuing obligations to any third party lender as set forth in
Section 3(b) hereof, if any, the assumption by INMC of all of CWM's
obligations, if any, with respect to such Asset pursuant to the terms
and conditions of a Reverse Repurchase Agreement or any other debt
obligation entered into by CWM with respect to such Asset.
7
<PAGE>
(b) INMC shall be entitled to all Rate Lock Fees and Rate Lock
Pair-Off Fees, in each case relating to Assets, collected by INMC or
CWM from Seller/Servicers.
(c) INMC shall, not later than the 30th day after the end of
each calendar year (or if such 30th day is not a business day, on the
next succeeding business day) pay to CWM the Early Settlement Fee, if
any, for such calendar year.
Section 5. Settlement.
-----------
(a) Subject to Sections 5(b) and 5(c) hereof, on the Settlement
Date for a Commitment, (i) CWM shall sell and assign to INMC all of
CWM's rights with respect to each Asset subject to settlement on such
Settlement Date, as identified by INMC, and (ii) INMC shall purchase
and assume all of CWM's rights and obligations with respect to such
Assets, in each case pursuant to the terms and conditions of this
Agreement.
(b) Notwithstanding the provisions of Section 5(a) hereof, the
event that CWM determines to sell one or more Assets subject to a
Commitment prior to the date that would otherwise constitute the
earliest Settlement Date for such Commitment in accordance with the
terms of this Agreement in order to maintain its status as a real
estate investment trust under the Code, CWM shall request in writing
that INMC agree to accelerate the Settlement Date as specified in such
request. If INMC does not agree to the accelerated Settlement Date
specified in such request within two business days of receipt of such
request, or agrees to such acceleration and subsequently fails to
settle on such accelerated Settlement Date, CWM shall thereafter be
entitled to sell such Assets to any third party on such terms as may
be agreed upon between CWM and such third party; provided, however,
that CWM shall pay to INMC a Commitment Pair-Off Fee with respect to
such Assets.
(c) Notwithstanding the provisions of Section 5(a) hereof, CWM
and INMC shall have the right to accelerate the Settlement Date for
any Commitment to such date and in such manner as may be mutually
agreed upon by CWM and INMC.
Section 6. Security for Value of Assets. In the event the aggregate
----------------------------
fair market value, as determined by CWM in its reasonable business judgment, of
the Assets subject to
8
<PAGE>
Commitments during any Commitment Term is, at any point during such term, less
than an amount equal to the aggregate purchase price paid by CWM for such
Assets, net of any payments of principal received by CWM on or in respect of
such Assets (the "aggregate net purchase price"), CWM, in its sole discretion,
may require INMC, as security for INMC's obligation to purchase such Assets
hereunder, to deliver to an account designated by CWM, within two (2) business
days' notice, immediately available funds, other assets or any combination
thereof, equal to the amount by which the aggregate net purchase price exceeds
the aggregate market value of such Assets. In the event CWM does not receive
such amount within two (2) business days of such notice, (a) the obligation of
CWM to issue any further Commitments or to sell any additional Assets to INMC
under this Agreement shall cease, (b) CWM shall have a right of set-off against
any amounts, of any nature, due and owing to or for the account of INMC pursuant
to the terms of this Agreement, and (c) CWM shall have the right to sell such
Assets to third parties and INMC shall be liable to CWM for the amount by which
the aggregate net purchase price paid by CWM for such Assets exceeds the net
proceeds from any such sale; provided, however, that CWM's obligation to issue
further Commitments and sell Assets to INMC under this Agreement may, at CWM's
sole discretion, be restored at such time, in such manner and subject to such
terms and conditions as CWM may determine at such time.
Section 7. Obligation to Purchase Limited to Eligible Assets;
--------------------------------------------------
Repurchase Obligation.
- ---------------------
(a) Notwithstanding any provision in this Agreement to the
contrary, INMC shall have no obligation to purchase an Asset hereunder
unless such Asset qualifies as an Eligible Asset on, and is not
incapable of delivery because it failed to close or was paid off prior
to, its Settlement Date.
(b) The parties agree that (i) INMC shall not amend or modify
the General Loan Eligibility criteria set forth in the Seller/Servicer
Guide without obtaining the prior written consent of CWM and (ii) upon
the written request of CWM, INMC shall revise the General Loan
Eligibility Criteria set forth in the Seller/Servicer Guide in such
manner as shall be mutually agreed upon by CWM and INMC.
(c) In the case of an Asset purchased or to be purchased by INMC
hereunder and determined, by the mutual agreement of CWM and INMC, not
to qualify as an Eligible Asset as of the related Settlement Date, CWM
shall, if INMC so elects (i) retain such Asset if not
9
<PAGE>
theretofore purchased by INMC or (ii) repurchase such Asset at a price
equal to the price paid by INMC for such Asset, net of any principal
payments received by INMC on or in respect of such Asset prior to the
date of such repurchase; provided, however, that, INMC hereby agrees
to use its best efforts, in accordance with the provisions of Section
11(a) hereof, to cause the related Seller/Servicer to repurchase such
Asset pursuant to the terms of the Seller/Servicer Guide prior to
making any request of CWM to do so.
(d) In the case of an Asset purchased or to be purchased by INMC
hereunder and determined by INMC to be unmarketable (for reasons
including, without limitation, relating to loan characteristics or
insufficient volume of loans with similar characteristics), INMC may
request that CWM either (i) retain such Asset if not theretofore
purchased by INMC or (ii) repurchase such Asset; it being understood
that CWM shall be under no obligation to honor either of such
requests. In the event that CWM agrees to repurchase such Asset, the
repurchase price shall equal the "fair market value" of such Asset as
determined in accordance with a methodology approved by the respective
boards of directors of CWM and INMC; provided, however, that no
repurchase of one or more Assets during any calendar quarter pursuant
to this Section 7(d) for an aggregate repurchase price in excess of
the amount determined by the respective boards of directors of CWM and
INMC from time to time may be consummated without the approval of such
boards of directors.
Section 8. Allocation of Risks, Expenses and Payments.
------------------------------------------
(a) Prior to each Settlement Date:
(i) CWM shall bear (x) the prepayment risk (subject to
Section 10 hereof) and (y) the credit risk of the related Asset;
(ii) any payments accruing on such Asset shall be solely
for the account of CWM;
(iii) the portion of any repurchase or other debt
obligation attributable to interest accruing on a Reverse
Repurchase Agreement or other debt obligation entered into by CWM
with respect to such Asset prior to such Settlement Date shall be
charged to the account of CWM; and
10
<PAGE>
(iv) INMC shall bear, and shall not be reimbursed for, any
Expenses it might incur in respect of such Asset.
(b) On and after each Settlement Date:
(i) INMC shall bear (x) the prepayment risk and (y) the
credit risk of the related Asset;
(ii) any payments accruing on such Asset shall be for the
sole account of INMC;
(iii) the portion of the repurchase or other debt
obligation attributable to interest accruing on a Reverse
Repurchase Agreement or other debt obligation entered into by CWM
with respect to such Asset subsequent to such Settlement Date
shall be charged to the account of INMC; and
(iv) INMC shall bear any Expense it might incur in respect
of such Asset.
Section 9. Notice Requirements.
-------------------
(a) INMC shall notify CWM of the Assets subject to each
Settlement Date at least two business days prior to such Settlement
Date.
(b) Contemporaneously with each Settlement Date, CWM or INMC (on
behalf of CWM) shall notify the counterparty-purchaser to any Reverse
Repurchase Agreement or the obligee under any other debt obligation
entered into by CWM with respect to the related Asset of (i) the
transfer to INMC of such Asset pursuant to the terms and conditions of
this Agreement and (ii) the assumption, if any, by INMC pursuant to
Sections 3 and 4 hereof of the rights and obligations under any
Reverse Repurchase Agreement or any debt obligation to which such
counterparty-purchaser or obligee is a party.
Section 10. Remedies. In the event (A) an Asset subject to a
--------
Commitment (i) does not qualify as an Eligible Asset as of the end of its
Commitment Term for a given fiscal quarter (and has not been retained or
repurchased pursuant to Sections 7(c)(ii) or 7(d) hereof) or (ii) was owned by
CWM for 60 days or less and cannot be delivered because it was paid off prior to
the related fiscal quarter end, and (B) the aggregate outstanding principal
balance of all such non-Eligible Assets and pre-paid Assets during a fiscal
quarter in the aggregate exceeds 5% of the aggregate principal amount of
11
<PAGE>
all Commitments funded by CWM during such fiscal quarter, INMC shall be
entitled, at the election of CWM, to either (x) a substitute Asset that
qualifies as an Eligible Asset and that is deemed by INMC, in its sole
discretion, to be of like yield, type and principal amount as the Asset for
which it is substituted, or (y) a Commitment Pair-Off Fee.
Section 11. Services Provided by INMC.
-------------------------
(a) INMC shall provide the following services in accordance with
the terms of this Agreement and customary and prudent standards of
practice:
(i) INMC shall act as master servicer with respect to each
Asset and Other Asset acquired by CWM;
(ii) INMC shall perform loan acquisition and marketing
services with respect to each Other Asset acquired by CWM; and
(iii) in the event that any Asset or Other Asset is
required to be repurchased by the related Seller/Servicer
pursuant to the related Seller/Servicer Guide, INMC shall use its
best efforts to cause such Seller/Servicer to repurchase such
Asset or Other Asset.
(b) INMC hereby agrees that it will not, nor will INMC permit
INFC or INHS to, enter into any Seller/Servicer Guide containing terms
and conditions that are inconsistent with this Agreement.
Notwithstanding the foregoing, to the extent that any term or
condition contained in any such Seller/Servicer Guide is inconsistent
with this Agreement, the parties hereto agree that, as between CWM and
INMC, the terms and conditions of this Agreement shall govern.
Section 12. Service Fees.
------------
(a) CWM shall, not later than the 30th day after the last
calendar day of each month (or if such 30th day is not a business day,
on the next succeeding business day), pay to INMC a master servicing
fee equal to the product of (a) the aggregate unpaid principal balance
of all Assets and Other Assets held by CWM for investment, in each
case as of the last business day of such month and (b) 0.025% per
annum (calculated on the basis of a 360-day year consisting of twelve
30-day
12
<PAGE>
months), or such other amount as may be mutually agreed upon by CWM
and INMC from time to time.
(b) CWM shall, not later than the 30th day after the last
calendar day of each calendar quarter (or if such day is not a
business day, on the next succeeding business day), pay to INMC a fee
for Expenses incurred and services rendered in connection with the
acquisition of Other Assets equal to $200.00 for each Other Asset
acquired during such calendar quarter, or such other amount as may be
mutually agreed upon by CWM and INMC from time to time.
(c) CWM shall, not later than the 30th day after the last
calendar day of each month (or if such 30th day is not a business day,
on the next succeeding business day), pay to INMC a sub-servicing fee
with respect to any Assets and Other Assets purchased by CWM on a
servicing released basis, in an amount equal to CWM's pro rata share
(based on the aggregate principal balance of such Assets and Other
Assets then owned by CWM) of the sub-servicing fee set forth in the
related sub-servicing agreement (such sub-servicing fee having been
negotiated by INMC with the related sub-servicer), or such other
amount as may be mutually agreed upon by CWM and INMC from time to
time.
(d) CWM shall, not later than the 30th day after the last
calendar day of each calendar quarter (or if such day is not a
business day, on the next succeeding business day), pay to INMC as
compensation for INMC's efforts, pursuant to Section 7(c) hereof, to
cause Seller/Servicers to repurchase Assets determined not to qualify
as Eligible Assets, a fee equal to $100.00 for each Asset so
repurchased during such calendar quarter, or such other amount as may
be mutually agreed upon by CWM and INMC from time to time.
Section 13. Indemnification.
---------------
(a) Subject to Sections 7 and 8 hereof, INMC agrees to indemnify
and hold harmless CWM from and against all costs, including without
limitation reasonable attorney's fees, damages, liabilities, losses or
expenses of any nature, relating to (i) any obligations with respect
any Assets that arise on or after the related Settlement Date or (ii)
any failure by INMC to purchase CWM's rights or assume CWM's
obligations with respect to any Assets as required under this
Agreement.
13
<PAGE>
(b) Subject to Sections 7 and 8 hereof, CWM agrees to indemnify
and hold harmless INMC from and against all costs, including without
limitation, reasonable attorney's fees, damages, liabilities, losses
or expenses of any nature, relating to (i) any obligations with
respect any Assets that arise prior to the related Settlement Date or
(ii) any failure by CWM to sell and assign any Assets to INMC as
required under this Agreement.
Section 14. Term of Agreement.
-----------------
(a) The term of this Agreement shall be for one year from the
date first written above and shall thereafter be automatically renewed
for successive one year periods; provided, however, that this
-------- -------
Agreement may be terminated upon ninety (90) days' written notice by
either party, in its sole discretion.
(b) Notwithstanding any termination of this Agreement pursuant
to Section 14(a) hereof, the provisions of Sections 4(c), 7(c), 7(d),
8, 10, 11(a), 11(c), 13, 15 hereof and this Section 14(b) shall
survive any such termination. In addition, upon any such termination
of this Agreement, any Commitment or portion thereof which remains
unfulfilled shall survive such termination.
Section 15. Miscellaneous.
-------------
(a) Waiver of Law. No provision of the Law is waived except as
-------------
expressly provided herein; provided, however, that CWM and INMC hereby
-------- -------
expressly waive the provisions of the Law to the full extent permitted
by the Law in order to uphold the provisions and validity of this
Agreement and to cause this Agreement to be valid, binding and
enforceable in accordance with its terms upon each of them and their
respective transferees, successors and assigns.
(b) Notices. Unless otherwise specified in this Agreement, any
-------
notice required by this Agreement shall be transmitted in writing or
by any other form of communication (including without limitation
electronic mail) acceptable to the party to whom it is given,
addressed to the Controller, with a copy to the General Counsel, of
the party to whom it is given, and shall be effective and deemed
delivered only when received by such persons.
14
<PAGE>
(c) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California.
(d) Captions. The captions to the sections, subsections and
--------
paragraphs in this Agreement are inserted for convenience only and
shall not affect the construction or interpretation hereof.
(e) Counterparts and Duplicate Originals. This Agreement and all
------------------------------------
amendments hereto may be executed in several counterparts and each
counterpart shall constitute a duplicate original of the same
instrument.
(f) Successors. Anything in this Agreement to the contrary
----------
notwithstanding, any transferee, successor or assign, whether
voluntary, by operation of law or otherwise, of the shares of CWM or
INMC shall be subject to and bound by the terms and conditions of this
Agreement as fully as though such person was a signatory hereto.
(g) Severability. Any provision hereof prohibited by or unlawful
------------
or unenforceable under any applicable law of any jurisdiction shall as
to such jurisdiction be ineffective without affecting any other
provision of this Agreement. To the full extent, however, that the
provisions of such applicable law may be waived, they are hereby
waived to the end that this Agreement be deemed to be a valid and
binding agreement enforceable in accordance with its terms.
(h) Arbitration. Any controversy or claim arising out of, or
-----------
relating to this Agreement, the breach hereof or thereof, or coverage
of this arbitration provision, shall be settled by arbitration which
shall be in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitration of such issues,
including the determination of any amount of damages suffered by
either party hereto by reason of the acts or omissions of either
party, shall be final and binding upon both parties. Notwith-standing
the foregoing, the arbitrator shall not be authorized to award
punitive damages with respect to any such claim or controversy.
Neither party shall seek punitive damages relating to any matter
under, arising out of or relating to this Agreement in any other
forum.
15
<PAGE>
(i) Third Parties. This Agreement is for the sole benefit of the
-------------
parties hereto. No creditor of either party shall have any right to
enforce any of the provisions hereof against any other party to this
Agreement. Nothing in this Agreement, whether express or implied, is
intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to this Agreement and
their respective permitted transferees, successors and assigns of
shares pursuant to Section 15(f) hereof, nor is anything in this
Agreement intended to relieve or discharge the obligation or liability
of any third person to either party to this Agreement, nor shall any
provision give any third person any right of subrogation or action
over or against either party to this Agreement.
(j) Assignment. Neither this Agreement nor either party's rights
----------
or obligations under it are assignable without the written consent of
the other party, which consent may be withheld for any reason
whatsoever (whether or not reasonable).
(k) Recovery of Expenses. In the event a dispute arises with
--------------------
respect to this Agreement, the party prevailing in such dispute shall
be entitled to recover all expenses, including without limitation
reasonable attorney's fees and expenses, incurred in ascertaining such
party's rights, in preparing to enforce, or in enforcing such party's
rights under this Agreement, whether or not it was necessary for such
party to institute suit.
(l) Other Remedies. Subject to Section 15(h) hereof, the parties
--------------
hereto shall have all remedies for breach of this Agreement available
to them provided by law or equity. Without limiting the generality of
the foregoing, the parties agree that in addition to all other rights
and remedies available at law or in equity, the parties shall be
entitled to obtain specific performance of the obligations of each
party to this Agreement and immediate injunctive relief and that in
the event any action or proceeding is brought in equity to enforce the
same, neither party will use, as a defense, that there is an adequate
remedy at law. The failure by either party to this Agreement to
exercise any such remedy does not constitute a waiver of that remedy
in the future.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
CWM MORTGAGE HOLDINGS, INC.
/s/ Angelo R. Mozilo
--------------------------------------
Name: Angelo R. Mozilo
Title: Chairman of the Board of Directors
INDEPENDENT NATIONAL MORTGAGE
CORPORATION
/s/ Michael W. Perry
--------------------------------------
Name: Michael W. Perry
Title: Exec. Vice President and
Chief Executive Operating Officer
17
<PAGE>
EXHIBIT A
EARLY SETTLEMENT FEE CALCULATION
--------------------------------
A. EARLY SETTLEMENT DAYS:
---------------------
<TABLE>
<CAPTION>
Principal Balance Days
of Assets Held Product
- ----------------- -------- ------------
<S> <C> <C>
$ 900,000 120 days $108,000,000
200,000 110 days 22,000,000
1,100,000 5 days 5,500,000
800,000 50 days 40,000,000
---------- -----------------
$3,000,000 $175,500,000/Days
========== =================
</TABLE>
Numerator = sum of products = 175,500,000
----------- = 58.5 Early
Denominator = aggregate Settlement
principal balance = 3,000,000 Days
B. EARLY SETTLEMENT FACTOR:
-----------------------
60 days - 58.50 days = 1.50 days
C. EARLY SETTLEMENT FEE:
--------------------
Early
$3,000,000 x 2.0%* x 1.5 days = $246.68 Settlement
----------------------------- Fee
365 days
_____________________________
*Calculated in accordance with the definition of Net Spread.
A-1
<PAGE>
EXHIBIT 10.9
EXECUTION COPY
INMC CAPITALIZATION AGREEMENT
This INMC Capitalization Agreement (the "Agreement") is entered into
and effective as of January 1, 1996, by and among CWM Mortgage Holdings, Inc.
("CWM"), Countrywide Funding Corporation ("Countrywide") and Independent
National Mortgage Corporation ("INMC").
WITNESSETH:
WHEREAS, INMC has been duly organized and is validly existing and in
good standing under the laws of the State of Delaware; and
WHEREAS, CWM, Countrywide and INMC desire to set forth the terms and
conditions under which CWM and Countrywide will maintain the capitalization of
INMC.
NOW, THEREFORE, in consideration of the agreements herein contained,
CWM, Countrywide and INMC agree as follows:
1. Definitions. Each term defined in this Section, when used in this
-----------
Agreement, shall, unless the context otherwise requires, have the following
meaning:
"Applicable Federal Rate" means the short term federal rate,
compounded semiannually, as determined by the Secretary of the Treasury for
purposes of Section 1274(d) of the Code adjusted as of the beginning of each
calendar month.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means all of the authorized common stock, par value
$.01 per share, of INMC.
"INMC Ownership Percentage" means the relative ownership of INMC by
CWM and Countrywide, which shall correspond to the percentage of any dividends
payable to CWM as the holder of Preferred Stock and Countrywide as the holder of
Common Stock as determined by Article IV of INMC's Certificate of Incorporation.
<PAGE>
"Law" means any constitutional provision, statute or other law, rule,
regulation or interpretation of any government or any agency, bureau, board,
commission, court, department official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state or local, domestic or
foreign, or any decree, injunction, judgment, order, ruling, assessment or writ.
"Preferred Stock" means all of the authorized Series A Preferred
Stock, par value $.05 per share, of INMC.
2. Capitalization of INMC. The authorized capitalization of INMC
-----------------------
consists of 10,000 shares of Preferred Stock and 10,000 shares of Common Stock.
Of the 10,000 shares of Preferred Stock, nine thousand nine hundred (9,900)
shares were issued to CWM on April 20, 1993 in exchange for an aggregate
consideration of two million four hundred seventy-five thousand dollars
($2,475,000), equal to ninety-nine percent (99%) of the then total
capitalization of INMC. Of the 10,000 shares of Common Stock, one hundred (100)
shares were issued to Countrywide on April 20, 1993 in exchange for an aggregate
consideration of twenty-five thousand dollars ($25,000), equal to one percent
(1%) of the then total capitalization of INMC. There are no other issued and
outstanding shares of either Preferred Stock or Common Stock as of the date
hereof.
3. Rights and Preferences. The rights and preferences of the Preferred
----------------------
Stock and the Common Stock shall be as specified in INMC's Certificate of
Incorporation.
4. Additional Capital Contributions to INMC. In the event that CWM
----------------------------------------
shall contribute any capital to INMC from and after the date hereof, Countrywide
shall be deemed to be on notice of and, within two (2) business days of receipt
of demand therefor, shall pay to CWM in immediately available funds the amount
of such capital contributions allocable to Countrywide on the basis of the INMC
Ownership Percentage.
5. Advances.
---------
(a) From time to time during the term of this Agreement, CWM may
make advances to Countrywide hereunder for the purpose of satisfying
Countrywide's payment obligations pursuant to Section 4 hereof. In the
event that Countrywide fails to pay to CWM any amount required under
Section 4 hereof within the time prescribed by such Section, CWM may,
at its election, advance any such amount to Countrywide hereunder.
<PAGE>
(b) Countrywide unconditionally promises to pay to CWM principal
and interest on any advances made pursuant to Section 5(a) hereof. Any
such advances shall be evidenced by a single revolving demand
promissory note, substantially in the form of Exhibit A hereto (the
"Countrywide Revolving Demand Promissory Note"), representing the
aggregate sum of all outstanding principal and interest due on such
advances. The unpaid principal balance of the Countrywide Revolving
Demand Promissory Note shall equal (i) the unpaid principal amount of
all advances made by CWM to Countrywide pursuant to Section 5(a)
hereof minus (ii) all principal repayments with respect to such
advances; provided, however, that in no event shall the unpaid
principal amount of the Countrywide Revolving Demand Promissory Note
exceed five hundred thousand dollars ($500,000). Any advance made by
CWM to Countrywide pursuant to Section 5(a) hereof, and any unpaid
interest thereon, shall be due and payable on demand by CWM and may be
prepaid in whole or in part by Countrywide at any time, without
premium or penalty. Upon any termination of this Agreement pursuant to
Section 7(a) hereof, any such advance shall mature and, together with
accrued and unpaid interest thereon, become immediately due and
payable. Interest shall accrue on all outstanding amounts advanced
pursuant to Section 5(a) hereof, from and including the date of the
making of such advance, to but excluding the date on which the
principal amount of such advance shall be paid in full, at a rate
equal to the Applicable Federal Rate, and shall be due and payable at
least monthly. CWM shall notify Countrywide at least once per month of
(i) the aggregate amounts advanced and outstanding pursuant to Section
5(a) hereof for all prior periods up to and including the then current
month and (ii) the then-applicable interest rate.
(c) All payments made by Countrywide hereunder shall be made in
immediately available funds to an account designated by, or upon the
order of, CWM. If Countrywide shall fail to make any payment when due
hereunder, (i) such failure shall constitute a default hereunder
entitling CWM, notwithstanding anything to the contrary contained in
Section 8(h) hereof, to pursue any remedy available to CWM provided by
law or equity and (ii) in addition to any remedy described in clause
(i) above and not by way of limitation, Countrywide shall pay interest
on such overdue amount
<PAGE>
(to the extent lawful) at a rate equal to the Applicable Federal Rate,
plus 2%.
(d) Countrywide hereby agrees that, for so long as this
Agreement is in effect or any advances, together with any accrued
interest thereon, are outstanding, on the third anniversary of the
execution and delivery of the Countrywide Revolving Demand Promissory
Note, and no later than every three years thereafter, Countrywide
shall execute and deliver to CWM a new Countrywide Revolving Demand
Promissory Note.
6. Receipts and Distributions. All rights and obligations of CWM and
--------------------------
Countrywide not otherwise specified in this Agreement relating to any activities
with respect to INMC shall be allocated between CWM and Countrywide in
proportion to their INMC Ownership Percentages.
7. Term of Agreement.
------------------
(a) The term of this Agreement shall be for one year from the
date first written above and shall thereafter be automatically renewed
for successive one-year periods; provided, however, that this
-------- -------
Agreement may be terminated upon ninety (90) days' written notice by
any party, in its sole discretion.
(b) Notwithstanding any termination of this Agreement pursuant
to Section 7(a), the provisions of Sections 5(b), 5(c), 5(d), 8 and
this Section 7(b) shall survive any such termination.
8. Miscellaneous.
--------------
(a) Waiver of Law. No provision of the Law is waived except
-------------
as expressly provided herein; provided, however, that CWM, Countrywide
-------- -------
and INMC hereby expressly waive the provisions of the Law to the full
extent permitted by the Law in order to uphold the provisions and
validity of this Agreement and to cause this Agreement to be valid,
binding and enforceable in accordance with its terms upon each of them
and their respective transferees, successors and assigns.
(b) Notices. Unless otherwise specified in this Agreement,
-------
any notice required by this Agreement shall be transmitted in writing
or by any other form of communication (including without limitation
electronic mail) acceptable to the party to whom it is given and
<PAGE>
shall be effective and deemed delivered only when received by such
party.
(c) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California.
(d) Captions. The captions to the sections, subsections and
--------
paragraphs in this Agreement are inserted for convenience only and
shall not affect the construction or interpretation hereof.
(e) Counterparts and Duplicate Originals. This Agreement and
------------------------------------
all amendments hereto may be executed in several counterparts and each
counterpart shall constitute a duplicate original of the same
instrument.
(f) Successors. Anything in this Agreement to the contrary
----------
notwithstanding, any transferee, successor or assign, whether
voluntary, by operation of law or otherwise, of the shares of CWM,
Countrywide or INMC shall be subject to and bound by the terms and
conditions of this Agreement as fully as though such person was a
signatory hereto.
(g) Severability. Any provision hereof prohibited by or
------------
unlawful or unenforceable under any applicable law of any jurisdiction
shall as to such jurisdiction be ineffective without affecting any
other provision of this Agreement. To the full extent, however, that
the provisions of such applicable law may be waived, they are hereby
waived to the end that this Agreement be deemed to be a valid and
binding agreement enforceable in accordance with its terms.
(h) Arbitration. Any controversy or claim arising out of, or
------------
relating to this Agreement, the breach hereof or thereof, or coverage
of this arbitration provision, shall be settled by arbitration which
shall be in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitration of such issues,
including the determination of any amount of damages suffered by any
party hereto by reason of the acts or omissions of any party, shall be
final and binding upon all parties. Notwithstanding the foregoing, the
arbitrator shall not be authorized to award punitive damages with
respect to any such claim or controversy. No party shall seek punitive
damages relating to any matter under, arising out of or relating to
this Agreement in any other forum.
<PAGE>
(i) Third Parties. This Agreement is for the sole benefit
-------------
of the parties hereto. No creditor of INMC shall have any right to
enforce any of the provisions hereof against any party to this
Agreement. Nothing in this Agreement, whether express or implied, is
intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to this Agreement and
their respective permitted transferees, successors and assigns of
shares pursuant to Section 9(f) hereof, nor is anything in this
Agreement intended to relieve or discharge the obligation or liability
of any third person to any party to this Agreement, nor shall any
provision give any third person any right of subrogation or action
over or against any party to this Agreement.
(j) Assignment. Neither this Agreement nor any party's rights
----------
or obligations under it are assignable without the written consent of
each of the other parties to whom such rights or obligations relate,
which consent may be withheld for any reason whatsoever (whether or
not reasonable).
(k) Recovery of Expenses. In the event a dispute arises with
--------------------
respect to this Agreement, the party prevailing in such dispute shall
be entitled to recover all expenses, including, without limitation,
reasonable attorneys' fees and expenses, incurred in ascertaining such
party's rights, in preparing to enforce, or in enforcing such party's
rights under this Agreement, whether or not it was necessary for such
party to institute suit.
(l) Remedies. Subject to Section 8(h) hereof, the parties
--------
hereto shall have all remedies for breach of this Agreement available
to them provided by law or equity. Without limiting the generality of
the foregoing, the parties agree that in addition to all other rights
and remedies available at law or in equity, the parties shall be
entitled to obtain specific performance of the obligations of each
party to this Agreement and immediate injunctive relief and that in
the event any action or proceeding is brought in equity to enforce the
same, no party will use, as a defense, that there is an adequate
remedy at law. The failure by any party to this Agreement to exercise
any such remedy does not constitute a waiver of that remedy in the
future.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
CWM MORTGAGE HOLDINGS, INC.
/s/ Angelo R. Mozilo
----------------------------------
Name: Angelo R. Mozilo
Title: Chairman of the Board of Directors
COUNTRYWIDE FUNDING CORPORATION
/s/ Thomas K. McLaughlin
----------------------------------
Name: Thomas K. McLaughlin
Title: Executive Vice President
and Chief Financial Officer
INDEPENDENT NATIONAL MORTGAGE
CORPORATION
/s/ Michael W. Perry
----------------------------------
Name: Michael W. Perry
Title: Exec. Vice President and
Chief Executive Operating Officer
<PAGE>
EXHIBIT A
[FORM OF COUNTRYWIDE REVOLVING DEMAND PROMISSORY NOTE]
COUNTRYWIDE FUNDING CORPORATION
REVOLVING DEMAND PROMISSORY NOTE
$500,000.00 Pasadena, California
January 1, 1996
FOR VALUE RECEIVED, Countrywide Funding Corporation ("Countrywide")
promises to pay to the order of CWM Mortgage Holdings, Inc. ("CWM") the unpaid
principal amount of all advances made to it by CWM as specified in Sections 5(a)
and 5(b) of the INMC Capitalization Agreement, dated as of January 1, 1996, by
and among Countrywide, CWM and INMC, as amended from time to time (the
"Agreement").
Countrywide also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full as specified in Section
5(b) of the Agreement. The aggregate unpaid principal amount of this Note, as
set forth in the books and records of CWM, shall be presumptive evidence of the
principal amount and interest owing and unpaid on this Note.
If Countrywide shall fail to make any payment when due hereunder, such
failure shall entitle CWM to pursue the remedies set forth in Section 5(c) of
the Agreement.
This Note is issued pursuant to and entitled to the benefits of the
Agreement to which reference is hereby made for a more complete statement of the
terms and conditions under which the advances evidenced hereby were made and are
to be repaid.
All payments of principal and interest due in respect of this Note
shall be made by wire transfer in immediately available funds to the account of
CWM at:
ABA No.: 121000358
Acct. Title: CWM MORTGAGE HOLDINGS, INC.
Acct. No.: 12350-04627
or at such other place as shall be designated in writing for such purpose.
This Note shall be deemed to be a contract under the laws of the State
of California and for all purposes shall be construed in accordance with the
laws of that State.
<PAGE>
IN WITNESS WHEREOF, Countrywide has caused this Note to be duly
executed and delivered by its officers thereunto duly authorized as of the date
first written above.
COUNTRYWIDE FUNDING CORPORATION
/s/ Thomas K. McLaughlin
-----------------------------------
Name: Thomas K. McLaughlin
Title: Executive Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT 10.10
-----
EXECUTION COPY
REVOLVING WORKING CAPITAL CREDIT FACILITY
AND CREDIT SUPPORT AGREEMENT
This Revolving Working Capital Credit Facility and Credit Support
Agreement (the "Agreement") is entered into and effective as of January 1, 1996,
by and between CWM Mortgage Holdings, Inc. ("CWM") and Independent National
Mortgage Corporation ("INMC").
WITNESSETH:
WHEREAS, INMC may from time to time desire to borrow from CWM amounts
necessary to fund the working capital needs of INMC; and
WHEREAS, CWM, on an uncommitted basis, may desire to advance such
amounts to INMC during the term of this Agreement.
NOW, THEREFORE, in consideration of the agreements herein contained,
CWM and INMC agree as follows:
1. Definitions. Each term defined in this Section, when used in this
-----------
Agreement, shall, unless the context otherwise requires, have the following
meaining:
"Applicable Federal Rate" means the short term federal rate,
compounded semiannually, as determined by the Secretary of the Treasury for
purposes of Section 1274(d) of the Internal Revenue Code of 1986, as amended,
adjusted as of the beginning of each calendar month.
"Federal Funds Rate" shall have the meaning ascribed thereto in
Section 2(e).
"Law" means any constitutional provision, statute or other law, rule,
regulation or interpretation of any government or any agency, bureau, board,
commission, court, department official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state or local, domestic or
foreign, or any decree, injunction, judgment, order, ruling, assessment or writ.
"LIBOR" means the London interbank offered rate for one-month United
States dollar deposits calculated in the manner described in Section 2(e).
<PAGE>
"Interest Determination Date" means the first business day of each
calendar month.
"Net Worth" means, at any time for the determination thereof, the
excess of total assets over total liabilities, in each case determined in
accordance with generally accepted accounting principles, consistently applied.
2. The Revolving Loans.
--------------------
(a) From time to time during the term of this Agreement, INMC
may request that CWM advance amounts to INMC hereunder. Upon receipt of any
such request, CWM may, on an uncommitted basis, advance amounts to INMC
pursuant to this Agreement. Subject to and upon compliance with the terms
and conditions of this Agreement, INMC unconditionally promises to pay to
CWM principal and interest on any advance made to INMC by CWM hereunder.
Any such advance shall be evidenced by a single revolving demand promissory
note, substantially in the form attached hereto as Exhibit A (the "INMC
Revolving Demand Promissory Note"), representing the aggregate sum of all
principal and interest amounts with respect to all such advances.
(b) The unpaid principal amount of the INMC Revolving Demand
Promissory Note shall equal (i) the unpaid principal amount of all advances
made by CWM to INMC, minus (ii) all principal repayments with respect to
such advances; provided, however, that in no event shall the unpaid
-------- -------
principal amount of the INMC Revolving Demand Promissory Note exceed one
hundred million dollars ($100,000,000).
(c) Any advance made by CWM to INMC pursuant to Section 2(a)
hereof, and any accrued and unpaid interest thereon, shall be due and
payable on demand by CWM and may be prepaid by INMC in whole or in part at
any time, without premium or penalty. Upon any termination of this
Agreement pursuant to Section 6 hereof, any such advance shall mature and,
together with any accrued and unpaid interest thereon, become immediately
due and payable.
(d) Each advance shall bear interest, which interest shall be
due and payable at least monthly, on the outstanding principal amount
thereof, from and including the date of the making of such advance to but
excluding the date on which the principal amount of such advance shall be
paid in full, at a rate per annum equal to the greater of (i) LIBOR plus
4.0% and (ii)
<PAGE>
9.5% (computed on the basis of the actual number of days elapsed in a year
of 360 days). Notwithstanding the foregoing, the rate at which each advance
shall bear interest shall not be less than the Applicable Federal Rate. CWM
shall notify INMC at least once per month of (i) the aggregate amounts
advanced and outstanding pursuant to Section 2(a) hereof for all prior
periods up to and including the then current month and (ii) the then-
applicable interest rate.
(e) LIBOR for the calendar month in which the related Interest
Determination Date occurs will be established by CWM on each Interest
Determination Date as follows:
(i) "LIBOR" shall mean, with respect to each Interest
Determination Date, the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/100th of 1%) for Dollar deposits with a
duration of one (1) month on the Telerate Page 3750 at or about 11:00 a.m.
(London time) on such date, or, if such page ceases to display such
information, then such other page as may replace it on that service for the
purpose of display of such information (the "Telerate Rate"). If the
Telerate Rate cannot be determined, then LIBOR shall mean, with respect to
such Interest Determination Date, the arithmetic mean of the rates of
interest (rounded upwards, if necessary, to the nearest 1/100th of 1%)
offered to two prime banks in the London interbank market (selected by CWM)
of Dollar deposits with a duration of one (1) month at or about 11:00 a.m.
(London time) on such date.
(ii) If on any Interest Determination Date only one or none of
such prime banks provides such offered quotations, LIBOR for such Interest
Determination Date shall be the Federal Funds Rate. The "Federal Funds
Rate" for each Interest Determination Date will be determined by CWM as of
the second business day prior to such Interest Determination Date (a
"Federal Funds Rate Determination Date") and will be the rate on such
Federal Funds Rate Determination Date for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)." In the event that
such rate is not published prior to 3.00 P.M., New York City time, on the
Interest Determination Date pertaining to such Federal Funds Rate
Determination Date, the Federal Funds Rate will be the rate on such Federal
Funds Rate Determination Date as published by the Federal Reserve Bank of
New York in its daily statistical release
<PAGE>
"Composite 3:30 P.M. Quotations for U.S. Governmental Securities"
("Composite Quotations") under the heading "Federal Funds Effective Rate."
If by 3:00 P.M., New York City time, on such Interest Determination Date
such rate is not yet published in either H15(519) or Composite Quotations,
then the Federal Funds Rate will be calculated by CWM and will be the
arithmetic mean of the rates for transactions in overnight Federal Funds
arranged by three leading brokers of Federal Funds transactions in The City
of New York selected by CWM as of 9:00 A.M., New York City time, on such
Interest Determination Date; provided, however, that if the three brokers
selected as aforesaid by CWM are not quoting rates as mentioned in this
sentence, the Federal Funds Rate for such Interest Determination Date will
be the Federal Funds Rate in effect on such Federal Funds Rate
Determination Date.
The establishment of LIBOR by CWM shall (in the absence of
manifest error) be final, conclusive and binding upon CWM and INMC.
(f) All payments by INMC hereunder shall be made in immediately
available funds to an account designated by, or upon the order of, CWM. If
INMC shall fail to make any payment when due hereunder, (i) such failure
shall constitute a default hereunder entitling CWM, notwithstanding
anything to the contrary contained in Section 7(h) hereof, to pursue any
remedy available to CWM provided by law or equity and (ii) in addition to
any remedy described in clause (i) above and not by way of limitation, INMC
shall pay interest on such overdue amount (to the extent lawful) at a rate
equal to the then-applicable interest rate hereunder, plus 2%.
(g) INMC hereby agrees that, for so long as this Agreement is in
effect, on the third anniversary of the execution and delivery of the INMC
Revolving Demand Promissory Note, and no later than every three years
thereafter, INMC shall execute and delivery to CWM a new INMC Revolving
Demand Promissory Note.
3. Recourse. The obligations of each party under this Agreement shall be
--------
with full recourse against all the assets to which such party has any right.
4. Debt/Equity Ratio. INMC shall not permit the ratio of its outstanding
-----------------
indebtedness (including advances hereunder but excluding trade payables arising
in the ordinary course of business) to its Net Worth to exceed 20:1 at any time
prior to the terminationof this Agreement.
<PAGE>
5. Future Credit Support.
---------------------
(a) INMC and CWM acknowledge that INMC may be able to borrow
funds from third party lenders at more favorable rates and margins if CWM
provides a guaranty of, or agrees to become jointly and severally with
respect to, such obligations. Accordingly, upon the request of INMC, CWM
may consider providing an unconditional and irrevocable guaranty as primary
obligor of, or becoming jointly and severally liable with respect to, any
of INMC's obligations to third party lenders. In the event CWM provides
such a guarantee or agrees to such joint and several liability, INMC shall
pay to CWM a fee in connection therewith equal to 0.25% per annum of the
average monthly outstanding balance under the credit facility as to which
INMC is primarily liable and as to which such guaranty or joint and several
liability relates, irrespective of whether CWM is otherwise a party to such
credit facility, payable in arrears on the last day of each month, or such
other amount as shall be mutually agreed upon by CWM and INMC from time to
time.
(b) In the event that CWM is required to make any payment to a
third-party lender in connection with a borrowing under a credit facility
pursuant to which INMC is the primary obligor, INMC shall reimburse CWM for
the amount of such payment, together with any related costs and expenses
(including, without limitation, reasonable attorney's fees) associated
therewith. Such reimbursement shall be in addition to any other right or
remedy CWM may hold against INMC, whether at law or in equity.
(c) In the event INMC is a borrower under a secured credit
facility (whether or not CWM is also a party to such facility either as an
obligor or guarantor), notwithstanding any provisions of such agreement to
the contrary, as between CWM and INMC, INMC shall be solely liable for any
and all commitment fees payable to the lenders under such facility to the
extent that the related collateral supporting such facility is owned by
INMC.
6. Term of Agreement.
-----------------
(a) The term of this Agreement shall be for one year from the
date first written above and shall thereafter be automatically renewed for
successive one year periods; provided, however, that this Agreement
-------- -------
<PAGE>
may be terminated upon ninety (90) days' written notice by any party, in
its sole discretion.
(b) Notwithstanding any termination of this Agreement pursuant
to Section 6(a) hereof, the provisions of Sections 2(c), 2(d), 2(g), 3,
5(a), 7 and this Section 6(b) shall survive any such termination.
7. Miscellaneous
-------------
(a) Waiver of Law. No provision of the Law is waived except as
-------------
expressly provided herein; provided, however, that CWM and INMC hereby
expressly waive the provisions of the Law to the full extent permitted by
the Law in order to uphold the provisions and validity of this Agreement
and to cause this Agreement to be valid, binding and enforceable in
accordance with its terms upon each of them and their respective
transferees, successors and assigns.
(b) Notices. Unless otherwise specified in this Agreement, any
-------
notice required by this Agreement shall be transmitted in writing or by any
other form of communication (including without limitation electronic mail)
acceptable to the party to whom it is given and shall be effective and
deemed delivered only when received by such party.
(c) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California.
(d) Captions. The captions to the sections, subsections and
--------
paragraphs in this Agreement are inserted for convenience only and shall
not affect the construction or interpretation hereof.
(e) Counterparts and Duplicate Originals. This Agreement and all
------------------------------------
amendments hereto may be executed in several counterparts and each
counterpart shall constitute a duplicate original of the same instrument.
(f) Successors. Anything in this Agreement to the contrary
----------
notwithstanding, any transferee, successor or assign, whether voluntary, by
operation of law or otherwise, of the shares of CWM or INMC shall be
subject to and bound by the terms and conditions of this Agreement as fully
as though such person was a signatory hereto.
<PAGE>
(g) Severability. Any provision hereof prohibited by or unlawful
------------
or unenforceable under any applicable law of any jurisdiction shall as to
such jurisdiction be ineffective without affecting any other provision of
this Agreement. To the full extent, however, that the provisions of such
applicable law may be waived, they are hereby waived to the end that this
Agreement be deemed to be a valid and binding agreement enforceable in
accordance with its terms.
(h) Arbitration. Any controversy or claim arising out of, or
-----------
relating to this Agreement, the breach hereof or thereof, or coverage of
this arbitration provision, shall be settled by arbitration which shall be
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. The arbitration of such issues, including the
determination of any amount of damages suffered by either party hereto by
reason of the acts or omissions of either party, shall be final and binding
upon both parties. Notwithstanding the foregoing, the arbitrator shall not
be authorized to award punitive damages with respect to any such claim or
controversy. Neither party shall seek punitive damages relating to any
matter under, arising out of or relating to this Agreement in any other
forum.
(i) Third Parties. This Agreement is for the sole benefit of the
-------------
parties hereto. No creditor of either party shall have any right to
enforce any of the provisions hereof against the other party to this
Agreement. Nothing in this Agreement, whether express or implied, is
intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to this Agreement and
their respective permitted transferees, successors and assigns of shares
pursuant to Section 7(f) hereof, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third
person to either party to this Agreement, nor shall any provision give any
third person any right of subrogation or action over or against either
party to this Agreement.
(j) Assignment. Neither this Agreement nor either party's rights
----------
or obligations under it are assignable without the written consent of the
other party, which consent may be withheld for any reason whatsoever
(whether or not reasonable).
<PAGE>
(k) Recovery of Expenses. In the event a dispute arises with
respect to this Agreement, the party prevailing in such dispute shall be
entitled to recover all expenses, including, without limitation, reasonable
attorneys' fees and expenses, incurred in ascertaining such party's rights,
in preparing to enforce, or in enforcing such party's rights under this
Agreement, whether or not it was necessary for such party to institute
suit.
(l) Remedies. Subject to Section 7(h) hereof, the parties hereto
shall have all remedies for breach of this Agreement available to them
provided by law or equity. Without limiting the generality of the
foregoing, the parties agree that in addition to all other rights and
remedies available at law or in equity, each party shall be entitled to
obtain specific performance of the obligations of the other party to this
Agreement and immediate injunctive relief and that in the event any action
or proceeding is brought in equity to enforce the same, neither party will
use, as a defense, that there is an adequate remedy at law. The failure by
either party to this Agreement to exercise any remedy does not constitute a
waiver of that remedy in the future.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
CWM MORTGAGE HOLDINGS, INC.
/s/ Angelo R. Mozilo
--------------------------------------------
Name: Angelo R. Mozilo
Title: Chairman of the Board of Directors
INDEPENDENT NATIONAL MORTGAGE CORPORATION
/s/ Michael W. Perry
--------------------------------------------
Name: Michael W. Perry
Title: President and Chief Executive Officer
<PAGE>
EXHIBIT A
[FORM OF INMC REVOLVING DEMAND PROMISSORY NOTE]
INDEPENDENT NATIONAL MORTGAGE CORPORATION
REVOLVING DEMAND PROMISSORY NOTE
$100,000,000.00 Pasadena, California
January 1, 1996
FOR VALUE RECEIVED, Independent National Mortgage Corporation ("INMC")
promises to pay to the order of CWM Mortgage Holdings, Inc. ("CWM") the unpaid
principal amount of all advances made to it by CWM as specified in Sections 2(b)
and 2(c) of the Revolving Working Capital Credit Facility and Credit Support
Agreement, dated as of January 1, 1996, by and between CWM and INMC, as amended
from time to time (the "Agreement").
INMC also promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid in full as specified in Sections 2(d) of
the Agreement. The aggregate unpaid principal amount of this Note, as set forth
in the books and records of CWM shall be presumptive evidence of the principal
amount and interest owing and unpaid on this Note.
If INMC shall fail to make any payment when due hereunder, such
failure shall entitle CWM to pursue the remedies set forth in Section 2(f) of
the Agreement.
This Note is issued pursuant to and entitled to the benefits of the
Agreement to which reference is hereby made for a more complete statement of the
terms and conditions under which the advances evidenced hereby were made and are
to be repaid.
All payments of principal and interest due in respect of this Note
shall be made by wire transfer in immediately available funds to the account of
CWM at:
ABA NO.: 121000358
ACCT. TITLE: CWM MORTGAGE HOLDINGS, INC.
NO.: 12350-04627
or at such other place as shall be designated in writing for such purpose.
This Note shall be deemed to be a contract under the laws of the State
of California and for all purposes shall be construed in accordance with the
laws of that State.
<PAGE>
IN WITNESS WHEREOF, INMC has caused this Note to be duly executed and
delivered by its officers thereunto duly authorized as of the date first written
above.
INDEPENDENT NATIONAL MORTGAGE
CORPORATION
/s/ Michael W. Perry
--------------------------------------------
Name: Michael W. Perry
Title: President and Chief Executive Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,435
<SECURITIES> 0
<RECEIVABLES> 2,467,674
<ALLOWANCES> (6,711)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,659,663
<CURRENT-LIABILITIES> 0
<BONDS> 299,381
0
0
<COMMON> 440
<OTHER-SE> 369,648
<TOTAL-LIABILITY-AND-EQUITY> 2,659,663
<SALES> 0
<TOTAL-REVENUES> 22,247<F1>
<CGS> 0
<TOTAL-COSTS> 4,484
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,403
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 15,360
<INCOME-TAX> 0
<INCOME-CONTINUING> 15,360
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,360
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0.36
<FN>
<F1>Includes 40,523 of interest expense related to mortgage loan activities.
</FN>
</TABLE>
